U.S. Stocks on Track to End Winning Streak

By Riva Gold and Michael Wursthorn Features Dow Jones Newswires

U.S. stocks edge lower

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-- Government bond prices, utilities stocks rise

-- European, Asian shares rise slightly

Declines in shares of technology and consumer-staple stocks threatened to end major indexes' run of recent gains on Thursday.

The Dow Jones Industrial Average slipped 36 points, or 0.2%, to 22376, on track for declines after nine consecutive sessions of advances. The S&P 500 fell 0.2%, while the tech-heavy Nasdaq Composite fell 0.3%.

Some investors and analysts attributed the pause in stocks to lingering uncertainty after the latest Federal Reserve policy decision. The Fed's suggestion on Wednesday that it would leave the possibility open for a rate increase in December caught some investors off guard, portfolio managers said.

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Low interest rates have helped keep U.S. stocks climbing since the financial crisis. A Fed that raises rates faster than the economy can support could cause the stock rally to stall, investors say.

"The market is sorting through to what extent it needs to incorporate future Fed activity into its thinking," said Mike Allison, a portfolio manager with Eaton Vance. "There's some uncertainty as to the impact since interest rates have been so low for so long."

Technology stocks in the S&P 500 fell 0.5% on Thursday, with chip makers suffering some of the steepest declines due, in part, to a rising dollar and its impact on multinational companies, some traders and investors said.

Nvidia shed 3.3%, while Skyworks Solutions and Broadcom were both off more than 1%.

Shares of Apple continued to fall after the company acknowledged problems with cellular connectivity in its newest smartwatch. Apple was recently down 1.3%, putting it on track for its worst two-day stretch since June.

Shares of consumer staple companies also broadly declined, led by grocer Kroger, down 2%, and Coty, which fell 3.4%.

Meanwhile, government bonds and their stock-market proxies rose.

Utilities shares, considered bondlike because of their hefty dividends, added 0.2% in the S&P 500. Meanwhile, the yield on the benchmark 10-year U.S. Treasury note edged down to 2.268%, according to Tradeweb, from 2.276% on Wednesday. Yields fall as bond prices rise.

While the Fed's plan to start shrinking its $4.2 trillion portfolio of mortgage and Treasury bonds was largely expected, some investors said the central bank's indication that it remained on track to raise interest rates later this year raised concerns around a mistake that could send markets tumbling.

"It seems like the Fed is on a modestly earlier time frame than we had thought," said Jason Pride, director of investment strategy for Glenmede Trust Co. "As with any policy tightening scenario, you introduce the risk of a misstep due to the inability to measure the impact correctly."

Meanwhile, many investors are now looking ahead to any policy developments in Washington that could provide further direction for markets.

"I think imminently we will start to price in a tax cut or tax reform," said Eddie Perkin, chief equity investment officer at Eaton Vance.

"Now is a time to be selling what has worked this year and buying what has lagged," he said, noting he is preparing for a rotation out of technology and health-care company shares and into banks and companies currently hardest hit by taxes.

Elsewhere, the Stoxx Europe 600 rose 0.2%, led by a 1.4% advance in bank stocks.

Japan's Nikkei Stock Average edged up 0.2% after the Bank of Japan left its policy unchanged Thursday, sticking to its massive stimulus program.

-- Kenan Machado contributed to this article.

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

(END) Dow Jones Newswires

September 21, 2017 13:25 ET (17:25 GMT)