Post-election rally pauses as stocks, dollar slip

Wed Dec 21, 2016 4:44pm EST
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By Dion Rabouin

NEW YORK (Reuters) - Stocks edged down and the dollar eased from a 14-year high on Wednesday, giving back some of the gains chalked up since Donald Trump's U.S. election victory as investors took profits on the rally in risk assets over the past six weeks.

Wall Street was modestly lower with healthcare and real estate shares losing ground a day after the Nasdaq Composite and the Dow Jones Industrial Average hit record highs. The Dow remained just below the 20,000 threshold.

U.S. stocks have surged since the Nov. 8 election. The Dow has jumped 9 percent and the S&P 500 has gained 6 percent, with traders betting that President-elect Trump and a Republican-controlled Congress will embark on steep tax cuts and fiscal spending to stimulate the economy.

"People are taking a pause and they want to see what's going to happen," said Chris Zaccarelli, Chief Investment Officer for Cornerstone Financial Partners. "In his first 100 days in office, it will be interesting to see what legislation they can get through Congress and what regulations they will repeal."

The Dow Jones Industrial Average .DJI closed 32.66 points, or 0.16 percent, lower at 19,941.96, the S&P 500 .SPX lost 5.58 points, or 0.25 percent, to 2,265.18 and the Nasdaq Composite .IXIC dropped 12.51 points, or 0.23 percent, to 5,471.43.

The dollar index .DXY, which tracks the greenback against six other major currencies, fell 0.3 percent, retreating after hitting its highest since December 2002 on Tuesday.

U.S. 10-year Treasury note yields, which reached their highest in more than two years last week after the Federal Reserve raised interest rates and forecast more hikes in 2017 than most investors had expected, edged lower in light trading volume to 2.54 percent US10YT=RR.

Some traders likely reduced their dollar holdings on profit-taking ahead of a big batch of U.S. economic data on Thursday and the Christmas holiday, analysts said.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 16, 2016.  REUTERS/Brendan McDermid