investors sold shares of banks and industrial companies wednesday, ending a streak of gains for the dow jones industrial average that started at the beginning of election week. government bonds also steadied after their recent selloff. many of the assets that were early winners after donald trump<u+2019>s victory pared gains midweek, including shares of banks, health-care companies and materials and industrial firms. such sectors were among those swept up in investors<u+2019> enthusiasm for the prospect of expansive fiscal spending, tax cuts and regulatory rollbacks from the president-elect. the potential of some of those policies to spur growth and inflation also had put pressure on bond prices. the dow industrials fell 54.92 points, or 0.3%, to 18868.14 on wednesday, after closing at a record tuesday in its seventh consecutive session of gains. the s&p 500 fell 3.45 points, or 0.2%, to 2176.94 wednesday, while the nasdaq composite rose 18.96 points, or 0.4%, to 5294.58. financial shares led declines in the s&p 500, falling 1.4%. that reduces the sector<u+2019>s postelection advance to 9.3%. the s&p 500 has risen 1.7% since the election on nov. 8. goldman sachs group , j.p. morgan chase and caterpillar together shaved roughly 55 points off the dow industrials wednesday, but were all still up more than 10% since the election. while some investors remain concerned the benefits of government spending could be outweighed by potential trade conflicts or growing debt under a trump administration, <u+201c>there<u+2019>s definitely a level of optimism i haven<u+2019>t seen in awhile,<u+201d> said erik davidson, chief investment officer at wells fargo private bank. u.s. government-bond prices ended a six-session run of declines. as prices rose, the yield on the benchmark 10-year u.s. treasury note fell to 2.222%, from 2.240% tuesday. the decline in yields came after the labor department said u.s. business prices were flat in october , suggesting that inflation pressures remain muted. expectations for rising inflation under a trump administration have contributed to the recent bond rout, since inflation chips away at the value of longer-term government bonds over time. bonds strengthened further after the federal reserve said industrial production also was flat last month as mild weather reduced demand for home and office heating. before wednesday<u+2019>s session, the 10-year treasury note<u+2019>s yield had registered its biggest six-day increase since 2010, pushing up interest rates on everything from corporate bonds to mortgages. the 10-year yield was 1.867% on election day. one question for investors now is whether the bond selloff will resume before more concrete details about mr. trump<u+2019>s policies emerge. <u+201c>our view is that rates have room to go higher,<u+201d> said annika eiremo, a fund manager at janus capital group inc., a company with $195 billion under management. <u+201c>it<u+2019>s still early stages of a very uncertain time period in terms of what policy will be.<u+201d> large fiscal stimulus also typically requires an increase in the issuance of government bonds, which could reduce their prices further. oil prices slipped after jumping tuesday. u.s. crude for december delivery declined 0.5% to $45.57 a barrel. the stoxx europe 600 fell 0.2% as banks surrendered some of their recent gains. the financial sector did boost asian stock markets , however, with japan<u+2019>s nikkei stock average rising 1.1% on wednesday. <u+2014>jon sindreu contributed to this article. write to aaron kuriloff at aaron.kuriloff@wsj.com and sam goldfarb at sam.goldfarb@wsj.com
dow runs out of room to run - wsj
aaron kuriloff sam goldfarb