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Stocks close lower on worries about China and NAFTA

CNBC logo CNBC 1/10/2018 Alexandra Gibbs and Fred Imbert

Stocks ended lower Wednesday as traders fretted over the possibility of China halting its Treasury bond purchases and the U.S. pulling out of NAFTA.

The Dow closed down 16 points. The index had fallen 128 points at its session lows. The S&P 500 declined 0.11 percent. Utilities and real estate were the worst-performing sectors on the index. The Nasdaq ended 0.14 percent lower.

Bloomberg News, citing people familiar with the matter, reported that officials in Beijing have recommended the Chinese government lowers or even stops its buying of U.S. sovereign debt.

The report also notes that Chinese officials think U.S. debt is becoming less attractive compared to other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases.

Daniel Deming, a managing director at KKM Financial, said the report rattled financial markets. "We're now seeing rates go to levels the market hasn't had to contend with in a long time," he said. "The rate environment is changing dramatically. Now the market has to price that in. That's why you're seeing this pressure."

The major averages regained some footing as the day wore on. The Dow briefly turned positive, while the S&P 500 and Nasdaq climbed to trade well off their lows.

But they retreated from their highs of the day after Reuters, citing two Canadian government sources, reported that Canada is increasingly convinced that Trump will pull the U.S. out of the trade agreement.

Shares of General Motors fell nearly 3 percent on the back of the report. Canadian stocks fell broadly too.

Stocks posted record highs in the previous session, continuing their stellar start to 2018. Thus far, the Dow, S&P 500 and Nasdaq are up 2.7 percent, 2.9 percent and 3.8 percent, respectively, for the year.

Gold futures were higher by 0.4 percent at $1,318.90 per ounce, while the U.S. dollar dropped 0.3 percent against a basket of currencies.

In corporate news, Eastman Kodak shares surged after the company said it has used blockchain, the underlying technology for popular cryptocurrencies like bitcoin, to create a digital photography platform called KodakCoin.

Signet Jewelers was the worst-performing stock in the S&P 500, falling 7.8 percent after its holiday same-store sales fell short of estimates.


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