U.S. stocks declined on Wednesday, pausing after its advance into uncharted terrain, waiting for evidence that the economy has bounced back from a weather-plagued first quarter.
As the Dow and the S&P 500 on Wednesday came off record highs, the 10-year Treasury yield broke below a key support, viewed by some as signaling an economic slowdown and a reason to sell riskier assets.
The 10-year Treasury yield, used in figuring mortgage rates and other consumer loans, fell 6 basis points to 2.548 percent. It earlier hit a low of 2.5258, its lowest since Oct. 31.
"There is two-fold support, at 2.55 and 2.6, being tested today. Below that you can go back to secondary support at 2.4 percent," said Katie Stockton, chief technical strategist at BTIG.
"When I look at bond prices, there are some overbought readings that tell me they should start to stall here," Stockton added.
The 2.6 level is a "magic number for some, as it has been a risk-down, risk-off trigger. There are investors who sell stocks after it gets below 2.6 percent, as it's seen as predicting an economic slowdown," said Art Hogan, chief market strategist at Wunderlich Securities.
"We're going to give the market a chance here tomorrow with the data to get back on the winning streak and to new highs. So we'll be watching the cyclical numbers tomorrow, and want to see the spring rebound that (Federal Reserve Chair) Janet Yellen talked about," said Sean McCarthy, regional chief investment officer for Wells Fargo Private Bank.
Thursday's economic releases include data on industrial production, as well as regional gauges of business activity from the New York and Philadelphia Feds.
"We need a reason for the market to trade higher, and cyclical growth would be it. We're almost through earnings season, and looking for leadership. But it's got to be cyclical names and not defensive. It can't be utilities and health care, it's got to be industrials and technology," McCarthy added.
Deere declined after cutting its full-year revenue outlook; Sears Holdings turned lower after an initial jump after the department-store chain said it was exploring options including a possible sale for its stake in Sears Canada. Macy's also reversed course, falling after the retailer reported slightly better-than-expected earnings, but sales unexpectedly dropped. Shares of the New York Times dropped after the company said Jill Abramson, its executive editor, was unexpectedly leaving the position.
