Bloomberg news published a story Wednesday about the Chinese government possibly re-evaluating and reducing its purchases of U.S. Treasury securities. China?s State Administration of Foreign Exchange said, according to Reuters.
Airline stocks showed a particularly strong move to the upside on the day, adding to the gains posted in the previous session. With the upward move, the major averages climbed to new record closing highs. The Dow dipped 16.67 points or 0.1 percent to 25,369.13, the Nasdaq edged down 10.01 points or 0.1 percent to 7,153.57 and the S&P 500 slipped 3.06 points or 0.1 percent to 2,748.23. Bloomberg cited people familiar with the discussions on China's reserves, and reported that it wasn't clear whether the recommendations of the officials had been adopted.
The global media on Wednesday had said that China considered U.S. bonds non-lucrative and was thus looking to slow their purchases.More news: James Franco says allegations he's heard aren't accurate
Selling pressure waned over the course of the session, however, as traders may have been concerned about missing out on any further upside.
US government bond prices edged lower Thursday after minutes from the European Central Bank's December meeting hinted at an end to the central bank's giant bond-buying program.
The Labor Department said its producer price index for final demand edged down by 0.1 percent in December after climbing by 0.4 percent in November.More news: Are Hedge Funds Betting Against First Solar, Inc. (FSLR)?
"The futures are indicating a nasty opening as climbing yields awaken investors to a possible meltdown in the government bond market", Peter Cardillo, chief market economist at First Standard Financial in NY, wrote in a client note.
A separate report from the Labor Department unexpectedly showed a modest decrease in producer prices in the month of December. Export prices had expected to rise by 0.3 percent. Furthermore, the 10-year yield has failed to take its high from the first quarter of 2017, and the 30-year has remained even more contained in its moves.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the Natural Gas Index jumped by 2.4% and 2.3%, respectively, and the NYSE Arca Oil & Gas Index advanced by 1.9%.More news: Illinois Girl, 11, Can Take Medical Marijuana at School, Judge Agrees
Semiconductor, railroad, housing, and commercial real estate stocks also saw notable weakness, contributing to the modestly lower close by the broader markets.