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U.S. equities closed mostly lower on Thursday, as uncertainty over some of President-elect Donald Trump's policies gave investors pause, despite solid economic data.
During his campaign, Trump called for an overhaul of the North American Free Trade Agreement and has repeatedly said he will construct a wall along the U.S.-Mexico border. Trump has also called out companies for sending jobs out of the U.S. into other countries.
"There is still a lot of uncertainty," said Jeremy Klein, chief market strategist at FBN Securities. "We haven't had the inauguration, let alone details about his policies." "Not everyone is sold that this market is a one-way ramp higher," Klein said.
Adding to investors' worries was a Senate hearing on cybersecurity threats, as U.S. intelligence officials answered questions about their assessment that Russia interfered in the presidential election. "The whole hearing raises questions about whether the entire election was hacked," said Adam Sarhan, CEO at 50 Park Investments. "When you have concerns over a cybersecurity threat, that tends to send money away from risk assets into so-called safe-havens," such as gold, the Japanese yen and bonds.
The S&P 500 fell 0.1 percent, with financials falling around 1 percent to lead decliners. The Dow Jones industrial average closed about 40 points lower, with Goldman Sachs contributing the most losses, after falling more than 100 points at session lows. The Nasdaq composite however, rose about 0.2 percent and posted a new all-time closing high.
"We've had a lot of positive expectations priced in from the year-end rally, so the market is behaving accordingly," said Lisa Kopp, head of traditional investments at U.S. Bank Wealth Management. She also said that, while she is sanguine about stocks for 2017, "equities are going to have to come in strong, in terms of earnings. There is no room for disappointment."
U.S. equities have rallied sharply since the election, with the Dow and S&P rising 8.5 percent and 6 percent, respectively, with investors betting on lower taxes, more fiscal spending and looser regulations in certain sectors. However, "there's still a lot of uncertainty surrounding that trifecta," said Shannon Saccocia, head of asset allocation at Boston Private.
Entering Thursday trade, the Dow was about 60 points below the elusive 20,000 mark.
"We are bumping against that 20,000 level and we've been doing that for a while," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. "I think we all knew that, as the Dow got closer and closer [to 20,000], it would have some trouble breaking above it." He also said the 30-stock index faced similar difficulty when it was trying to break above 10,000 for the first time in the late 1990s.
Investors also digested several pieces of economic data. First, ADP said private employers added 153,000 jobs last month, considerably below thee expected 170,000. Meanwhile, weekly jobless claims came in at 235,000, below a consensus estimate of 260,000.
"Bottom line, as stated, job growth continues to slow as is typical in an aged recovery," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note. "While there are still plenty of able bodied workers on the sidelines, for those realistically looking for work, it's getting tougher and tougher to find the right, qualified (and motivated person)."
Other economic data released Thursday includes the December IHS Markit services PMI, which came in at 53.99, below November's print of 54.6. The ISM nonmanufacturing index, meanwhile, hit 57.2, above a consensus estimate of 56.6. A number above 50 indicates expansion within the sector, and a number below 50 shows contraction.
The December jobs report is set for release Friday at 8:30 a.m. ET, with economists polled by Reuters expecting the U.S. economy to have added 178,000 jobs. Andrew Chamberlain, chief economist at Glassdoor, thinks the U.S. economy added less jobs than the consensus, however. "When you get this close to full employment, it's natural to see fewer jobs added" in an economy, he said.
U.S. Treasurys rose broadly, with the benchmark 10-year note yield falling to 2.366 percent, while the short-term two-year note yield slipped to 1.178 percent, as traders and investors continued to digest the minutes from the Federal Reserve's December meeting.
The minutes, released Wednesday afternoon, showed the central bank is concerned that fiscal stimulus could lead to rates rising at a faster pace.
The U.S. dollar, meanwhile, fell 1.17 percent against a basket of currencies, pulling back further away from a 14-year high hit earlier this week. In turn, the yen rose against the greenback to trade at 115.58.
"The threat of Donald Trump's proposed fiscal policies falling short of market expectations has exposed the Greenback to downside risks," said Lukman Otunuga, research analyst at FXTM, in a note. "Although Wednesday's hawkish Fed minutes reinforced some speculations of the central bank raising US rates this year, the substantial uncertainty over how Trump's policies may impact the US economy could keep investors on edge."
Meanwhile, in Mexico, the country's central bank said it is selling U.S. dollars after the peso hit an all-time low against the greenback on Wednesday. The Mexican peso spiked violently against the dollar at around 8 a.m. ET, last trading 0.11 percent higher after advancing more than 1 percent at its highs.
The dropped 1.75 points, or 0.08 percent, to end at 2,269, with financials leading six sectors lower and real estate the biggest riser.
The Nasdaq composite rose 10.93 points, or 0.2 percent, to close at 5,487.94.
About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 914.49 million and a composite volume of 3.694 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.7.
On tap this week:
Earnings: Ruby Tuesday, PriceSmart
8:30 a.m. Employment
8:30 a.m. International trade
10 a.m. Factory orders
11:15 a.m. Chicago Fed President Charles Evans
1:00 p.m. Richmond Fed President Jeffrey Lacker
3:30 p.m. Dallas Fed President Robert Kaplan
11:15 a.m. Federal Reserve Governor Jerome Powell at AEA annual meeting
11:15 a.m. Minneapolis Fed President Neel Kashkari at AEA