US stocks dip from records on government shutdown anxiety

VIDEO: REUTERS
Traders work on the floor at the New York Stock Exchange on Jan 17, 2018.
Traders work on the floor at the New York Stock Exchange on Jan 17, 2018.PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks pulled back from records on Thursday (Jan 18) as concerns about a possible US government shutdown and lofty equity valuations dented sentiment.

The Dow Jones Industrial Average fell 0.4 per cent to finish the session at 26,017.81.

The broad-based S&P 500 lost 0.2 per cent at 2,798.03, while the tech-rich Nasdaq Composite Index slipped less than 0.1 per cent to 7,296.05.

The declines cames after all three indices ended at records on Wednesday.

Art Hogan, chief market strategist at Wunderlich Securities, said the bickering among congressional leaders over funding the government beyond Friday was disappointing after Washington successfully mobilised behind tax reform in December.

A government shutdown could be damaging to the economy, especially sectors that depend on federal spending, he said.

"You go from feeling pretty confident about Washington getting things accomplished" to "frustration" at the possibility of a government shutdown, Hogan said.

He said there also was a natural cooling off after Wednesday's rally and cited increased yields on US Treasuries as a potential drag. Higher yields can prod investors to shift funds away from equities into bonds.

General Electric had another bad day, falling 3.3 per cent following the news Tuesday that it was taking a US$6.2 billion (S$8.2 billion) charge linked to the insurance business. The conglomerate already was under heavy pressure due to weak performance in key industrial divisions.

Walmart advanced 1.6 per cent following an upgrade from Goldman Sachs, which praised the retail giant's strategy and said it was likely to grant a "meaningful" dividend hike due to US tax reform.

Morgan Stanley rose 0.9 per cent after reporting that fourth-quarter earnings of 84 cents per share, seven cents above expectations.