U.S. stocks slumped on Wednesday, as a round of disappointing corporate earnings and a spike in bond yields put both the Dow Industrials and S&P 500 index on track for their worst session in seven weeks.
Benchmark U.S. 10-year note
"This is something that`s been brewing for a few days, high dividend-paying names have been weak, weak, weak and the reason is this new move in the 10-year and the 30-year," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
"Although they aren`t particularly dramatic, that has people concerned that there`s changes in policy, that things are going to come to an end, that we`re going to be faced with higher rates, and as a result of that, equities are worth less."
Equities pared losses as yields retreated, following a Fox Business interview with Trump in which he said he was still considering keeping current Fed Chair Janet Yellen in the position. The 10-year last fell 11/32 in price to yield 2.4444 percent.
Low interest rates have been a driving factor in the 8-year bull market, with investors pushed into equities as other lesser-yielding instruments are viewed as unattractive by comparison.
Earnings season so far has been largely positive, with 72.1 percent of the 165 S&P 500 companies that have reported to date topping expectations, matching the average for the past four quarters.
However, with U.S. indexes at record levels, investors are taking a closer look at earnings to see if they justify stretched valuations.
Traders also cited a Wall Street Journal report that suggested - in contrast to commitments by President Trump - that Republicans were still considering limits on 401(k) retirement savings plans which could, in turn, dampen flows into investment funds.
Downbeat earnings from AT&T
The Dow Jones Industrial Average <.dji> fell 111.22 points, or 0.47 percent, to 23,330.54, the S&P 500 <.spx> lost 12.51 points, or 0.49 percent, to 2,556.62 and the Nasdaq Composite <.ixic> dropped 37.58 points, or 0.57 percent, to 6,560.85.
Selling was broad, with each of the 11 major S&P sectors in negative territory.
Declining issues outnumbered advancing ones on the NYSE by a 3.17-to-1 ratio; on Nasdaq, a 2.2-to-1 ratio favoured decliners.