Stocks fell on Wednesday as investors fretted over the possibility of China halting its Treasury bond purchases and the U.S. pulling out of NAFTA.
The S&P 500 declined 0.1 percent to close at 2,748.23. Utilities and real estate were the worst-performing sectors on the index. The Nasdaq composite finished 0.1 percent lower at 7,153.57. Both indexes snapped a six-day winning streak, posting their first negative close of 2018.
The Dow Jones industrial average fell 16.67 points to 25,369.13. The index had fallen 128.81 points at its session lows.
Bloomberg News reported Wednesday, citing people familiar with the matter, that officials in Beijing have recommended the Chinese government lowers — or even stops — its buying of U.S. sovereign debt.
The report also notes that Chinese officials think U.S. debt is becoming less attractive compared to other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases.
Daniel Deming, managing director at KKM Financial, said the report rattled financial markets. “We’re now seeing rates go to levels the market hasn’t had to contend with in a long time,” he said. “The rate environment is changing dramatically. Now the market has to price that in. That’s why you’re seeing this pressure.”
The major averages regained some footing as the day wore on. The Dow briefly turned positive, while the S&P 500 and Nasdaq climbed to trade well off their lows.
But they retreated from their highs of the day after Reuters reported, citing two Canadian government sources, that Canada is increasingly convinced that Trump will pull the U.S. out of the trade agreement.
Shares of General Motors fell nearly 2.4 percent on the back of the report. Canadian stocks fell broadly, too.
Stocks posted record highs in the previous session, continuing their stellar start to 2018. Thus far, the Dow, S&P 500 and Nasdaq are up 2.7 percent, 2.9 percent and 3.8 percent, respectively, for the year.
“When you start off the year the way we did, it’s usually because of asset allocation decisions made in December,” chairman and CEO of Marketfield Asset Management. “Now the market needs to recharge its batteries. This pattern is normal.”
Gold futures were higher by 0.4 percent at $1,318.40 per ounce, while the U.S. dollar dropped 0.2 percent against a basket of currencies.
In corporate news, Eastman Kodak shares surged 57.4 percent after the company said it has used blockchain — the underlying technology for popular cryptocurrencies like bitcoin — to create a digital photography platform called KodakCoin.
Signet Jewelers was the worst-performing stock in the S&P 500, falling 6.9 percent after its holiday same-store sales fell short of estimates.