Wall Street drops as cyclicals weigh; small-caps lag
US stocks dipped today, retreating from last week's record levels as investors hesitated to make big bets before the start of earnings season.
Cyclical stocks, which are tied to the pace of economic growth, ranked among the weakest of the day. The S&P industrial sector index fell 0.7 percent. The only sectors finishing the session on the plus side were defensive groups such as utilities, up 0.4 percent, telecom, up 0.3 percent and consumer staples, up 0.1 percent.
Small-cap stocks also underperformed, with the S&P Small-Cap 600 index down 1.5 percent. The Russell 2000 fell 1.8 percent, its biggest percentage drop since April 25.
Wall Street hit a number of milestones on Thursday, the final session before the Independence Day holiday, with the Dow topping 17,000 for the first time and the S&P 500 closing at a record high after a strong June jobs report.
The Dow Jones industrial average fell 44.05 points or 0.26 percent, to end at 17,024.21. The S&P 500 declined 7.79 points or 0.39 percent, to 1,977.65. The Nasdaq Composite dropped 34.40 points or 0.77 percent, to 4,451.53.
European stock markets retreated after weak German economic data took the wind out of a rally that had pushed a leading regional index back towards 6-1/2 year highs.
Portuguese bank Banco Espirito Santo was among the region's worst-performing stocks.
BES fell 5.2 percent as investors highlighted the difficulty facing the bank's new chief executive - Vitor Bento - in having to explain how Portugal's biggest bank will recover nearly a billion euros lent to family-controlled firms.
Some analysts said the European stock market could flatline in the near term although the longer-term outlook remained positive given the steps taken by the European Central Bank to boost the region's economy.
The pan-European FTSEurofirst 300 index, which hit a 6-1/2 year high of 1,399.62 points in June, closed down by 0.9 percent at 1,381.64 points.
Volumes were thin, coming in at just 58 percent of the index's 3-month daily average.
The euro zone's blue-chip Euro STOXX 50 index fell 1.2 percent to 3,230.92 points, while Germany's DAX - which hit a record high in June - weakened by 1 percent to 9,906.07 points.
Meanwhile, Japanese shares fell as profit-taking kicked in after it advanced to a 5-1/2-month high in the previous session.
But traders said the market was underpinned by expectations of further buying by domestic pension funds, which has been a major driving force behind the market's rally in the last two months.
The benchmark Nikkei average shed 0.4 percent to end at 15,378.44 points, still not far from Friday's 5-1/2-month closing high of 15,437.13. But trading was lackluster with volumes falling to the lowest level in a month due to the long US weekend.
The broader Topix dropped 0.4 percent at 1,279.87, while the JPX-Nikkei Index 400 fell 0.5 percent to 11,621.21.