U.S. stocks fell Wednesday as investors weighed signs of an improving economy against concerns about lofty stock valuations and rising inflation expectations.
The Dow Jones Industrial Average slipped about 80 points, or 0.3%, in recent trading, one day after closing at a record. The S&P 500 lost 0.7%, while the Nasdaq Composite tumbled 1.6%.
The U.S. stock market’s recent rally, which has launched major indexes to a series of record closes this year, has showed signs of cooling this week, even as new economic data has provided reason for optimism. On Wednesday, the latest retail sales report showed that U.S. shoppers sharply increased their spending in January after three months of decline during the holidays.
Even so, a rise in government-bond yields has caused some investors to reassess their appetite for more risky investments, particularly given the high valuations for many stocks, said Derek Halpenny, head of market research at MUFG Bank. Low bond yields had helped fuel interest in equity markets in recent months, he said.
The yield on the 10-year Treasury note fell to 1.281% from 1.298% on Tuesday.