The torrid advance in riskier assets eased, with US equities slipped from records after the longest rally in three years and Treasuries rising for the first time in six days.
Equity benchmarks slipped from records attained amid optimism that the economy is growing fast enough to withstand higher interest rates. Data on Thursday did little to alter that view, with housing starts topping estimates. Still, bonds advanced with gold as investors took stock after a weeklong rekindling of Trump trades. European shares slid for the first time in eight days. The dollar weakened.
The S&P 500 Index erased 0.4 percent in a matter of minutes after a $3.4 billion fund that specializes in options trading told CNBC that it had exited a short position in calls on futures. Speculation swirled overnight that buying by Catalyst Capital Advisers had contributed to gains during a seven-day winning streak.
â€œFollowing the sharp rally weâ€™ve seen in cyclical shares since early November, investors are now getting reluctant to just buy whole sectors such as mining and banks, and are starting to pick the best stocks within the sectors,â€ Stephane Ekolo, chief European strategist at Market Securities in London. â€œThese stocks will prove more resilient when the selloff comes.â€
Global equities jumped in value by more than $5 trillion since President Donald Trumpâ€™s November victory, spurred largely on bets his pledges to boost spending would activate growth and inflation. The relative strength index of the MSCIâ€™s broadest global equity gauge is signaling to some traders a correction is now due, while odds for a US rate hike in March are on the rise.
Data on Thursday showed U.S. housing starts fell in January to 1.25 million, compared with a revised 1.28 million in December. Weekly unemployment figures showed a rise of 5,000 new claimants to a lower-than-expected 239,000.
Whatâ€™s ahead for the markets:
The Group of 20 foreign ministers began a two-day meeting as part of Germanyâ€™s rotating chairmanship. Rex Tillerson is expected to make his first European trip as secretary of state.
Here are the main moves in markets:
The S&P 500 Index fell 0.3 percent at 11:48 a.m. in New York, after the longest rally since 2013. It lost as much as 0.4 percent. The CBOE Volatility Index and S&P 500 Index moved in unison on Wednesday for the ninth time this year. The behavior has become increasingly frequent: The two measures are moving in tandem by the most since 1995. The VIX rose 3.6 percent Thursday.
The Stoxx Europe 600 Index fell 0.4 percent, the first decline since Feb. 6, with only technology, health care, leisure and telecommunications shares eking out gains. The MSCI All Country World Index climbed 0.2 percent. Nestle, the worldâ€™s largest foodmaker, retreated 1.6 percent.
The MSCI Asia Pacific Index added 0.5 percent, though more stocks fell than rose. Chinese shares traded in Hong Kong extended a rally and the Hang Seng climbed to the highest since August 2015.
The Bloomberg Dollar Spot Index lost 0.2 percent, trimming losses of as much as 0.4 percent after the U.S. housing and jobs data. The yen appreciated 0.4 percent to 113.727 per dollar, the best performance after the Swiss franc in a basket of 17 peers.
The yield on 10-year Treasuries dropped two basis points to 2.47 percent after increasing 16 basis points in the prior five days. The move to lower U.S. corporate income tax rates and end net interest expense deduction â€œcould have severe implicationsâ€ for highly leveraged firms as near-term maturities come up for refunding, S&P says in report. Yields on 10-year Spanish notes fell seven basis points to 1.60 percent while the rate on similar Portuguese debt decreased six basis points to 4 percent.