By Richard Leong
NEW YORK (Reuters) - Wall Street stocks fell on Thursday due to a deteriorating economic outlook that was only partially offset by signs of trade progress between China and the United States, while gold and oil prices retreated from their recent peaks.
The dollar held steady against most major currencies, while the Australian dollar tumbled on jitters about a ban on that country's coal by a Chinese port.
Signs of positive developments in U.S.-Sino trade talks and a possible Brexit compromise between Britain and the European Union spurred selling of U.S. and core European government debt, pushing their yields higher.
The U.S. Commerce Department said on Thursday domestic orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7 percent.
Moreover, the U.S. Mid-Atlantic factory sector fell into contraction territory in February for the first time since May 2016, data from the Philadelphia Federal Reserve showed.
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"Overall, it is showing that the economy is not as strong as it was in the summer of 2018," aid Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
The grim economic data was offset by signs of progress in trade talks between Beijing and Washington.
The world's two biggest economies have started to outline commitments in principle on the most contentious issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war, according to sources familiar with the negotiations.
At 12:04 p.m. EST (1704 GMT), the Dow Jones Industrial Average fell 63.4 points, or 0.24 percent, to 25,891.04, the S&P 500 lost 11.67 points, or 0.42 percent, to 2,773.03 and the Nasdaq Composite dropped 35.47 points, or 0.47 percent, to 7,453.60.
The pan-European STOXX 600 index lost 0.35 percent and MSCI's gauge of stocks across the globe gained 0.47 percent.
The benchmark 10-year Treasury yield was up 4 basis points at 2.690 percent, while the German 10-year Bund yield rose 3 basis points to 0.13 percent.
Safe-haven demand for bonds cooled a bit as diplomats said Britain and the EU were moving closer to a legal compromise that Prime Minister Theresa May hopes will gain approval from the British parliament.
In the currency market, an index that tracks the dollar against a basket of currencies rose 0.1 percent, while the Aussie dollar was down 1.17 percent at $0.7080.
China's northern Dalian port has put an indefinite ban on coal imports from Australia since the start of February, a port official told Reuters on Thursday.
In the commodity market, crude prices pulled back from their highest levels of 2019 on hopes that oil supplies will balance later this year. [O/R]
U.S. crude fell 0.73 percent to $56.74 per barrel and Brent was last at $66.81, down 0.4 percent on the day.
Spot gold prices was down 0.61 percent at $1,330.30 having scaled a 10-month peak of $1,346.70 on Wednesday.
(Additional reporting by Kate Duguid, Gertrude Chavez-Dreyfuss in New York; Shreyashi Sanyal, K. Sathya Narayana in Bengaluru and Marc Jones in London; Daniel Leussink in Tokyo; Editing by Alison Williams and Dan Grebler)
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