After ending the previous session substantially higher, stocks gave back some ground during trading on Wednesday. Selling pressure was somewhat subdued, however, limiting the downside for the major averages.
The major averages ended the day firmly in negative territory. The Dow slid 87.80 points or 0.4 percent to 21,812.09, the Nasdaq dipped 19.07 points or 0.3 percent to 6,278.41 and the S&P 500 fell 8.47 points or 0.4 percent to 2,444.04.
The pullback on Wall Street came as traders reacted to comments made by President Donald Trump at a rally in Phoenix, Arizona, on Tuesday.
Trump pledged to a crowd of supporters that he would build the controversial wall on the border with Mexico even if it meant shutting down the government.
"If we have to close down our government, we're building that wall," Trump said in remarks at the Phoenix Convention Center.
The president also indicated he's likely to terminate the North American Free Trade Agreement, raising concerns about the impact on global trade.
Disappointing earnings news also weighed on Wall Street, with home improvement retailer Lowe's (LOW) under pressure after reporting weaker than expected second quarter results and forecasting full-year earnings below estimates.
Negative sentiment was also generated by a report from the Commerce Department unexpectedly showing a steep drop in new home sales in the month of July.
The report said new home sales plunged by 9.4 percent to an annual rate of 571,000 in July from the revised June rate of 630,000.
The steep drop surprised economists, who had expected new home sales to inch up to a rate of 612,000 from the 610,000 originally reported for the previous month.
However, selling pressure waned after an initial move to the downside as traders looked ahead to the Federal Reserve's upcoming Economic Policy Symposium in Jackson Hole, Wyoming.
Fed Chair Janet Yellen and European Central Bank President Mario Draghi are both scheduled to speak at the conference on Friday.
Sector News
After bucking the uptrend seen in the previous session, airline stocks saw further downside on the day. The NYSE Arca Airline Index tumbled by 2.1 percent to its lowest closing level in nine months.
Southwest Airlines (LUV), JetBlue (JBLU) and American Airlines (AAL) turned in some of the sector's worst performances.
Considerable weakness was also visible among railroad stocks, as reflected by the 1.5 percent drop by the Dow Jones Railroads Index. The index pulled back after jumping by 2 percent on Tuesday.
CSX Corp. (CSX) posted a notable loss after a report from the Wall Street Journal said the railroad operator is being hit by congestion, delays and erratic service.
On the other hand, steel stocks showed a strong move to the upside, driving the NYSE Arca Steel Index up by 1.8 percent. Cliffs Natural Resources (CLF) and Brazil's CSN (SID) posted notable gains.
Commercial real estate, gold and energy stocks also saw some strength on the day, helping to limit the downside for the broader markets.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday, with trading in Hong Kong suspended due to tropical cyclone Hato. Japan's Nikkei 225 Index rose by 0.3 percent, while China's Shanghai Composite Index edged down by 0.1 percent.
Meanwhile, European stocks moved mostly lower on the day. The German DAX Index fell by 0.5 percent and the French CAC 40 Index dropped by 0.3 percent, although the U.K.'s FTSE 100 Index closed just above the unchanged line.
In the bond market, treasuries moved back to the upside following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.4 basis points to a nearly two-month closing low of 2.171 percent.
Looking Ahead
Trading on Thursday may be impacted by reaction to economic reports on initial jobless claims and existing home sales.
On the earnings front, Guess? (GES), HP Inc. (HPQ), and Williams-Sonoma (WSM) are among the companies releasing their quarterly results after the close of today's trading.
Abercrombie & Fitch (ANF), Dollar Tree (DLTR), Sears (SHLD), Staples (SPLS) and Tiffany (TIF) are also due to report their results before the start of trading on Thursday.
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