Stock Rally Fizzles After Trump Speech

By Riva Gold Features Dow Jones Newswires

Dow edges lower after best day since April

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

-- Lowe's drops after earnings

A rally in global stocks stalled Wednesday after the Dow Jones Industrial Average's biggest daily advance since April.

The Dow Jones Industrial Average fell 82 points, or 0.4%, to 21818 shortly after the opening bell. The S&P 500 dropped 0.4%, and the Nasdaq Composite declined 0.5%.

Shares of Lowe's declined 4.5% after it lowered its outlook for the year. The Stoxx Europe 600 edged down 0.4% following its best session in over a week, while Asian shares erased early gains to close little changed.

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Some analysts attributed the caution in markets to comments from U.S. President Donald Trump on Tuesday threatening to shut down the government to secure funding for a wall on the southwest border as well as warnings on trade policy.

"It seems inconceivable that the debt ceiling won't be moved as it has been umpteen times, but the nearer the deadline comes, it will make people nervous," said Russ Mould, investment director at AJ Bell.

The Mexican peso, among the year's best-performing currencies, dropped 0.9% against the dollar after the comments on trade and a border wall, while gold climbed 0.4% and the yen rose 0.4% against the dollar as market havens found favor. Yields on 10-year Treasurys fell to 2.191% from 2.215% Tuesday. Yields move inversely to prices.

Still, many investors noted that recent jitters have come in thin summer trading and U.S. stocks remain close to record highs. The Dow added nearly 200 points on Tuesday as shares rebounded from a recent bout of risk aversion.

"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.

In Europe, the media sector led declines as shares of WPP, the world's largest advertising company, fell 10% after it lowered its forecast for the full year, reflecting a wider slowdown in industries such as consumer goods and retail.

Analysts also pointed to nervousness ahead of a central banking symposium in Jackson Hole, Wyo., beginning Thursday, where investors are eyeing any clues about monetary policy in the U.S. and eurozone. Purchasing managers' surveys released Wednesday showed the eurozone economy maintained its solid growth momentum in August.

The euro was last up 0.5% against the British pound, around its highest since 2009.

"The most interesting questions come from the ECB right now given the economies there have generally done better than expected," said Mr. Mould.

Earlier, Japan's Nikkei Stock Average rose as much as 0.9% from a four-month closing low but pared gains to 0.3% as the yen strengthened against the dollar.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was last down 0.1%.

Australia's stock benchmark shed early gains as losses deepened among shares of utilities companies, sending the S&P/ASX 200 down 0.2%.

The Shanghai Composite Index was down 0.1%, ending a four-day rally, with steel and precious-metals stocks the biggest decliners amid a 5% pullback in iron-ore and steel-rebar futures. The country's steel association late Tuesday said it saw limited room for further price gains after a recent rally.

Trading in Hong Kong was halted as Typhoon Hato passed by the city.

--Ese Erheriene, Nick Kostov and

Yifan Xie

contributed to this article.

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

(END) Dow Jones Newswires

August 23, 2017 09:53 ET (13:53 GMT)