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Stocks' perfect 2018 winning streak finally ends

Stock market record highs

NEW YORK - The stock market's fantastic start to 2018 stalled out on Wednesday after interest rates climbed. The S&P 500 and Nasdaq Composite turned in their first down days of the year, and along with the Dow Jones Industrials index, retreated a bit from Wednesday's latest record highs.

Losses had been much steeper in the morning, when the yield on the 10-year Treasury approached 2.60 percent. But the rise in rates moderated as the day progressed, and stocks recovered almost all of their losses.

Still, by trading's end on Wednesday, the S&P 500's perfect streak of a new all-time high for each trading day of 2018 -- seven altogether -- was broken. The broad market index ended 3 points lower, or 0.1 percent, at 2,748. Earlier in the morning, it was down as much as 0.6 percent. Wednesday ended the S&P 500's longest winning streak to lead off a year since 2010.

The Nasdaq composite fell 10 points, or 0.1 percent, to 7,154. The negative finish on Wednesday also broke the tech-heavy index's unblemished streak of daily new record highs in 2018.

The Dow Jones industrial average fell 17 points, or 0.1 percent, to close at 25,369. And the Russell 2000 index of small-cap stocks also slipped by 1 point, or 0.1 percent, to 1,559.

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Low interest rates have been one of the stock market's main propellants since the Great Recession. They make borrowing easier for companies and people, which greases the skids for the economy. Low rates also make bonds less attractive, which pushes investors into stocks.

Investors have long been preparing for a gradual increase in bond yields because the Federal Reserve is slowly raising short-term rates and pulling back from the bond purchases it made to aid the economy. But a sudden or sharp jump higher in rates could easily upset markets, which have been locked in remarkably calm conditions for more than a year.

The yield on the 10-year Treasury rose as high as 2.59 percent in the morning before falling back to 2.54 percent, nearly the same level as on Tuesday. It had been as low as 2.40 percent at the start of the year.

A report from Bloomberg News said China is considering a slowdown or halt to its purchases of U.S. Treasurys, which helped push rates higher. Investors are also speculating about whether Japan's central bank will slow its bond purchases to keep rates low.

Companies that pay big dividends had the day's biggest losses. They tend to move in the opposite direction of interest rates because higher bond yields can lure away investors seeking income. But higher interest rates can benefit banks, allowing them to make bigger profits on loans. 

Energy stocks edged up after prices for oil rose. Benchmark U.S. crude added 46 cents to $63.42 per barrel. That was West Texas Intermediate's first close above $63 since December 2014. Brent crude, the international standard, gained 24 cents to $69.06.

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United Continental (UAL) jumped to the biggest gain in the S&P 500 after the airline said a key revenue trend last quarter was better than it had earlier forecast. It credited stronger demand and fares. United rose $4.17, or 6.7 percent, to $73.08.

Signet Jewelers (SIG) fell to the largest loss of the S&P 500 after it reported weaker sales for the holiday season than a year earlier. Signet dropped $3.90, or 6.9 percent, to close at $52.69.

The dollar fell to 111.44 Japanese yen from 112.61 yen late Tuesday. The euro rose to $1.1959 from $1.1933, and the British pound fell to $1.3519 from $1.3534.

Gold rose $5.20 to $1,318.90 per ounce, silver added 1 cent to $17.02 per ounce and copper gained 2 cents to $3.24 per pound.

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