By Tanya Agrawal and Anya George Tharakan
The S&P and Dow were lower in late morning trading on Wednesday as financial stocks dropped after a seven-day rally since Donald Trump's surprise election win, while a recovery in technology shares boosted the Nasdaq.U.S. stocks have been on a tear since Trump's victory. The Dow had closed higher for seven days, with the last four at record levels.But they have given back some gains as investors look for more clarity regarding his policies and brace for higher interest rates.Trump's plans to cut taxes and raise infrastructure spending would boost economic activity, while his proposal to impose tariffs on cheap imports would likely drive inflation higher.That prospect has given rise to expectations that the Federal Reserve would raise interest rates faster than anticipated, boosting the dollar index to a 14-year high.The Fed will hike rates in December barring any major shocks, policymaker James Bullard said. Traders are pricing in a 81 percent chance that the central bank will raise rates next month, according to Thomson Reuters data."We've seen markets rally sharply since the election and now its time for a very reasonable reassessment of what's going on. 'Have we gone too far too fast?' This is a bit of a reality check," said Brad McMillan, chief investment officer at Commonwealth Financial.
"At this point, a December rate hike is baked in. It would require something pretty exceptional for the Fed not to hike."At 11:02 a.m. ET (1602 GMT) the Dow Jones Industrial Average was down 65.88 points, or 0.35 percent, at 18,857.18.The S&P 500 was down 5.14 points, or 0.24 percent, at 2,175.25.The Nasdaq Composite was up 9.70 points, or 0.18 percent, at 5,285.32.
Seven of the 11 major S&P 500 sectors were lower, with the financial index's drop of 1.48 percent leading the decliners.The sector has gained 10.9 percent since the election on Nov. 8 – the biggest among the S&P sectors and well above the S&P's 1.9 percent gain as well as the Dow's 3.2 percent rise."Investors should book gains and wait for more evidence that the structural improvement in macro trends and regulations will materialize", brokerage Baird said of the rally in bank stocks.
JPMorgan's 2.2 percent fall weighed the most on the sector.The S&P technology index rose 0.59 percent and led the gainers, helped by a rise in Apple, Microsoft and Alphabet.Target jumped 7.6 percent after the retailer reported a higher-than-expected quarterly profit and raised its full-year forecast.Declining issues outnumbered advancing ones on the NYSE by 1,443 to 1,418. On the Nasdaq, 1,335 issues rose and 1,285 fell.The S&P 500 index showed 11 new 52-week highs and two new lows, while the Nasdaq recorded 113 new highs and 15 new lows. (Reporting by Tanya Agrawal; Editing by Savio D'Souza)
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