Stock Rally Fizzles After Dow's Best Day Since April

By Riva Gold and Amrith Ramkumar Features Dow Jones Newswires

Dow Jones Industrial Average edges lower after best day since April

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-- Mexican peso under pressure after President Trump's comments

-- Lowe's shares drop after earnings

Disappointing earnings and political turbulence put renewed pressure on U.S. stocks Wednesday.

The Dow Jones Industrial Average fell 44 points, or 0.2%, to 21855 after its largest one-day advance since April, and the S&P 500 shed 0.2%. The Nasdaq Composite also declined 0.2%, following the tech-heavy index's best session since late June.

Company reports drove some of the day's biggest moves in individual stocks. Lowe's was among the worst performers in the S&P 500, falling nearly 6% after the home-improvement retailer posted earnings that fell below analyst expectations and lowered its outlook for the year. Home Depot shares fell 1.3%, slicing roughly 14 points off the Dow industrials. The company, which raised its outlook for the second time this year in mid-August, was on track for its eighth move of at least 1% this month, the most since November.

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Coty was an S&P 500 laggard for the second straight day after reporting weak beauty sales in the most recent quarter. Shares fell roughly 6%.

Some analysts and investors said Mr. Trump's threat to shut down the government to secure funding for a wall on the southwest border with Mexico contributed to Wednesday's declines.

"That's giving investors a bit of a cautious stance," said Michael Hans, chief investment officer at Clarfeld Financial Advisors. "There's no panicked feeling of risk-off. It's just a little bit of a pullback and caution," he said.

Last week, some weak earnings and fallout from Mr. Trump's comments about the protests in Charlottesville, Va., weighed on stocks as several business leaders distanced themselves from the president.

Some said a quiet period with few economic data releases was also partially responsible for recent market jitters. The Dow jumped nearly 200 points on Tuesday as shares rebounded from a recent dip.

"With valuations elevated here, the market is going to be more vulnerable to short-term negative news and negative shocks," said Katie Nixon, chief investment officer at Northern Trust Wealth Management.

"But unless something really impacts the economy, it's unlikely that the market impact will be long-lasting," she said, given the current state of growth and corporate earnings.

The Mexican peso, among the year's best-performing currencies, dropped 0.3% against the dollar after Mr. Trump's comments.

Government bonds rose, with the yield on the 10-year U.S. Treasury note falling to 2.185%, according to Tradeweb, from 2.215% Tuesday. Yields fall as prices rise.

Elsewhere, the Stoxx Europe 600 edged down 0.5% following its best session in over a week. The media sector led declines as shares of WPP, the world's largest advertising company, fell 11% after it lowered its forecast for the full year, reflecting a wider slowdown in industries such as consumer goods and retail.

Asian shares erased early gains to close little changed. Japan's Nikkei Stock Average jumped from its lowest close in months but pared gains to 0.3% as the yen rose against the dollar.

The Shanghai Composite Index declined less than 0.1%, ending a four-day rally, with steel and precious-metals stocks the biggest decliners. Trading in Hong Kong was halted as Typhoon Hato passed by the city.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

August 23, 2017 12:54 ET (16:54 GMT)