U.S. stocks reversed to the downside in afternoon action, with the markets appearing to get fatigued after the sharp rally off of the December lows as optimism of a U.S.-China trade deal failed to continue to lift stocks. Focus seemed to turn to what the next catalyst could be for stocks to extend the 2019 rally amid a host of potential global headwinds. Construction spending surprisingly declined to kick off a heavy week of data that will culminate with Friday’s February nonfarm payroll report. Treasury yields and gold declined, while the U.S. dollar and crude oil prices nudged higher. M&A news highlighted a relatively light equity front, with Biogen agreeing to acquire Nightstar Therapeutics.

The Dow Jones Industrial Average (DJIA) dropped 207 points (0.8%) to 25,820, the S&P 500 Index fell 11 points (0.4%) to 2,793, and the NASDAQ Composite decreased 18 points (0.2%) to 7,578. In moderate volume, 982 million shares were traded on the NYSE and 2.5 billion shares changed hands on the NASDAQ. WTI crude oil increased $0.79 to $56.59 per barrel and wholesale gasoline was up $0.02 to $1.75 per gallon. Elsewhere, the Bloomberg gold spot price traded $6.88 lower to $1,286.56 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 96.61.

Construction spending decreased 0.6% month-over-month (m/m) in December, versus Bloomberg projections of a 0.1% increase, and following November’s unrevised 0.8% rise. Residential spending decreased 1.4% m/m, though non-residential spending was flat.

Treasuries were higher, with the yield on the 2-year note dipping 1 basis point to 2.54%, while the yields on the 10-year note and the 30-year bond declined 3 basis points to 2.72% and 3.10%, respectively. Bond yields gave back some of last week’s rise and the U.S. dollar ticked higher, while the boost for stocks from optimism that a final trade deal between the world’s two largest economies could be wrapped up by the end of the month faded.

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