The Dow Jones Industrial Average edged slightly higher Wednesday, as concerns of a pickup in trade tensions weighed on the index.
The Dow Jones Industrial Average rose as much as 182 points in early trading, but later fell after U.S. Commerce Secretary Wilbur Ross, while speaking in Davos, Switzerland, accused Beijing of practicing protectionism under the guise of free trade. The Dow recovered from the decline later in the day to close at a new record.
Continue Reading Below
The comments followed remarks by U.S. Treasury Secretary Steven Mnuchin in Davos that the Trump administration supports "bilateral trade agreements" and that a weaker dollar was good for trade. The ICE U.S. Dollar Index fell below 90 for the first time since December 2014 after Mr. Mnuchin's remarks.
"It seems like the government is moving toward a more-protectionist policy," said Larry Peruzzi, managing director of international equity trading at Mischler Financial. "Firms that would be hurt the most would be our exporters, and [technology] is one of our biggest exports."
The Dow Jones Industrial Average rose 41.31 points, or 0.2%, to 26252.12. The S&P 500 declined 1.59 points, or less than 0.1%, to 2837.54, while the Nasdaq Composite slipped 45.23 points, or 0.6%, to 7415.06 -- its biggest decline of the year.
Shares of technology companies in the S&P 500 fell 0.9%, making the sector the broad index's worst-performing group. Chip maker Intel was down 55 cents, or 1.2%, at $45.51, while Apple shed 2.82, or 1.6%, to 174.22.
Changes to trade policy, such as the tariffs the Trump administration announced on imported solar panels and washing machines, could make certain goods more expensive, lead to an uptick in inflation and force the Federal Reserve to alter its glide path for interest rates, analysts said. For many investors, rising inflation is one of the biggest threats to the long-running rally.
"Maybe that causes the Fed to move rates too quickly and that could ultimately lead to a mild recession," said Timothy Chubbs, chief investment officer of Univest Wealth Management Division.
Company earnings announcements also contributed to some of the biggest individual stock moves.
Shares of United Continental Holdings fell 11%, or 8.92, to 69.05 after investors worried that the airline's expansion plans threatened profit margins and could spark a price war among its rivals. Shares of four other airlines due to report earnings Thursday also slipped, including Southwest Airlines and American Airlines Group.
Those losses offset gains among companies that posted generally positive results. Shares of W.W. Grainger added 42.52, or 19%, to 271.97 after the distributor of cleaning supplies, safety gear and other items reported better-than-expected earnings.
Navient shares gained 1.07, or 8%, to 14.51 after the student-loan servicer swung to a net loss due to a one-time write-down of deferred-tax assets. Excluding the write-down, Navient reported a profit slightly ahead of analysts' projections.
Elsewhere, Mr. Mnuchin's comments on the dollar contributed to modest pullbacks of shares in Europe and Japan.
A weaker dollar tends to be a boon for S&P 500 multinationals, with the index generating roughly 30% of revenues outside the U.S., according to FactSet. But the currency's slide isn't helpful for their overseas counterparts, whose revenues are worth less when translated back into stronger local currencies.
The Stoxx Europe 600 fell 0.5%, snapping a four-session winning streak, while Japan's Nikkei declined 0.8% to halt a three-day streak of gains.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and Riva Gold at email@example.com
(END) Dow Jones Newswires
January 24, 2018 17:34 ET (22:34 GMT)
Continue Reading Below