U.S. stocks closed lower on Wednesday as investors grappled with a threat from President Donald Trump to shut down the government if Congress fails to fund a Mexico border wall.
Stocks managed to briefly pare losses after comments from U.S. House Speaker Paul Ryan calling a government shutdown unnecessary. Yet that was not enough to calm nerves as the deadline to approve spending measures draws near and a fight looms over raising the cap on government borrowing.
Congress will have about 12 working days when it returns from its summer recess on Sept. 5 to raise the debt ceiling before the U.S. Treasury exhausts the last of its options to remain current on all of the federal government's obligations.
Credit ratings agency Fitch Ratings said a failure to raise the ceiling in a timely manner would prompt it to review its rating on U.S. sovereign debt, "with potentially negative implications."
"What we've seen over this last week or so in financial markets has been a bit of wiggling around regarding the U.S. political situation," said Paul Eitelman, multi-asset investment strategist at Russell Investments in Seattle.
"Ultimately, I don't think markets care that much about the noise coming out of Washington, D.C., but they're trying to translate what that noise means for the potential for tax reform."
Trump's comments also affected the bond and currency markets, with the dollar index slipping 0.4 to 93.14 and 10-Year U.S. Treasury yields falling a touch below 2.17 percent on safety buying.
Investors have grown increasingly concerned about Trump's ability to legislate his pro-growth agenda given the near-constant political turbulence in the White House.
The Dow Jones Industrial Average fell 87.8 points, or 0.4 percent, to 21,812.09, the S&P 500 lost 8.44 points, or 0.34 percent, to 2,444.07 and the Nasdaq Composite dropped 19.07 points, or 0.3 percent, to 6,278.41.
The CBOE Volatility index, a widely-followed measure of market anxiety, increased 6.0 points to 12.03, its first rise in four days.
Investors looked towards a speech by Federal Reserve Chair Janet Yellen at a meeting of central bankers in Jackson Hole, Wyoming, on Friday, which will be scrutinized for clues on the U.S. central bank's monetary policy.
Also weighing on sentiment was data showing sales of new U.S. single-family homes unexpectedly fell in July to a seven-month low.
"It seems like the story there is the affordability for housing is really what is weighing on the new-home market," said Lindsey Bell, investment strategist at CFRA Research in New York.
The consumer discretionary index ended down 0.8 percent, dragged lower by a 3.71-percent decline in Lowe's Companies after disappointing results and forecast.
Bigger rival Home Depot dropped 0.54 percent to $149.10.
Shares of advertising firm Omnicom dropped more than 6.94 percent to $72.71, while Interpublic Group fell 6.32 percent to $72.71 after WPP cut its sales forecast after consumer goods giants curbed spending. WPP'S U.S.-listed shares sank 11.49 percent..
Advancing issues outnumbered declining ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.
The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 98 new highs and 85 new lows.
About 5.04 billion shares changed hands in U.S. exchanges, below the 6.2 billion daily average over the last 20 sessions.
Canada's benchmark stock index rose on Wednesday, after upbeat quarterly results from Royal Bank of Canada helped lift financial stocks, and higher oil prices gave oil and gas companies a boost.
RBC's stock rose 1.1 percent to C$93.01 after it kicked off the country's banking earnings season with double-digit growth at its wealth management business, which offset a weaker showing in its capital markets unit.
Rivals reporting over the next week made smaller gains, with the heavyweight financials group gaining 0.5 percent overall.
"The best thing about Royal is there was absolutely no evidence at all of bad credit conditions," said David Baskin, portfolio manager and president of Baskin Financial Services.
The Toronto Stock Exchange's S&P/TSX composite index finished up 78.20 points, or 0.52 percent, at 15,063.16. Six of its 10 main sectors were higher.
Enbridge Inc topped the list of companies that had the biggest impact on the index, rising 2 percent to C$51.18. TransCanada Corp was not far behind, with a 1.1 percent climb to C$63.31.
Energy stocks, which account for some 20 percent of the TSX's weight, finished up 1.1 percent alongside oil prices that bounced on data showing U.S. crude inventories fell for the eighth straight week. An approaching storm along the Gulf Coast also raised the possibility of output disruptions.
Baskin said further oil gains would likely be capped due to the ability for U.S. producers to quickly bring on additional supply as prices rise.
Interest-rate sensitive utilities stocks added 0.9 percent, with Fortis Inc up 1.1 percent at C$45.82.
Iamgold Corp finished 3.7 percent higher at C$7.49 and Cominar REIT jumped 5.2 percent to C$13.46 after analysts at Bank of Montreal raised their price targets and recommendations on the stocks.
The overall materials group, home to mining and other resource firms, gained 0.6 percent.
Industrial stocks were off a modest 0.1 percent, but losses were tempered by Air Canada, which advanced 3.8 percent to C$23.92. Canada's largest airline announced a new Montreal-Tokyo non-stop flight service.