U.S. equities closed slightly lower on Monday, but held near record levels, while shares of Apple declined on a rare downgrade.
The S&P 500 slipped 1 percent, with materials and utilities lagging. The Dow Jones industrial average fell about 20 points, with Apple contributing the most losses. The Nasdaq composite traded 0.1 percent lower after reaching an all-time intraday high.
Rob Lutts, chief investment officer at Cabot Wealth Management, said two key elements supporting this market are the relative value of stocks versus other alternatives, like bonds, and strong earnings growth.
"Clearly the market is more expensive compared to a few years ago, but earnings have justified those valuations," he said.
Still, some traders are worried about this stock-market rally as a large chunk of this year's gains have come from just five large-cap tech stocks.
"The averages are making new highs but that's because of a handful of stocks. If you take those out, we'd probably be lower," said Peter Cardillo, chief market economist at First Standard Financial.
The S&P tech sector has handily outperformed in 2017, advancing 22.5 percent. On Monday, the sector rose 0.1 percent, but a decline in Apple shares capped gains.
Apple's stock fell 1 percent after Pacific Crest analyst Andy Hargreaves downgraded the stock to sector weight from overweight. In a Sunday note, Hargreaves said the stock is not pricing in potential risks, like supply issues with the new iPhone 8.
"We believe AAPL anticipates strong performance in the iPhone 8
Investors also kept an eye on Apple's annual developers' conference on Monday, where the revealed several new products.
Stocks traded in a narrow range for most of Monday's session, with the S&P moving just 0.21 percent.
"There's not a lot of economic news to really decipher," said Nick Raich, CEO of The Earnings Scout, noting the market will remain in a "wait-and-see mode for a few weeks until we get peak second-quarter earnings."
In economic news, the IHS Markit U.S. services PMI for May came in at 53.6, up from 53.1 in April, marking "the largest rise in overall activity since February," IHS said in a release.
The May ISM nonmanufacturing index, meanwhile, came in at 56.9, just below a consensus estimate of 57.0.
Overseas, European stocks traded lower as investors digested a terrorist attack in London that killed at least seven people on Saturday night.
The FSTE 100 fell 0.27 percent, while the French CAC 40 dropped 0.66 percent. The pan-European Stoxx 600 index fell 0.1 percent.
U.K. Prime Minister Theresa May said that it's time to step up the fight against Islamist extremism in the wake of the new attack. "It is time to say enough is enough," she said.
Major U.S. Indexes
The Dow Jones industrial average fell 22.25 points, or 0.1 percent, to close at 21,184.04, with Apple leading decliners and Wal-Mart outperforming.
The slipped 2.97 points, or 0.12 percent, to end at 2,436.10, with utilities leading seven sectors lower and energy the top advancer.
The Nasdaq declined 10.11 points, or 0.16 percent, to close at 6,295.68.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 699.47 million and a composite volume of 2.893 billion.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.1.
—CNBC's Silvia Amaro and John Melloy contributed to this report.
On tap this week:
Monday
Earnings: Coupa Software, Thor Industries
Tuesday
Earnings: Dave & Buster's, Lands' End, Michaels Cos, Ambarella, IDT, United Natural Foods, Canadian Solar, Oxford Industries
10:00 a.m. JOLTs
10:00 a.m. QFR
Wednesday
Earnings: Brown-Forman, ABM, Greif, Verint Systems
3:00 p.m. Consumer Credit
Thursday
Earnings: Dell Technologies, JM Smucker, Vail Resorts, Verifone, Cloudera
7:45 a.m. European Central Bank rate decision
8:30 a.m. News conference with ECB President Mario Draghi
8:30 a.m. Initial claims
10:00 a.m. QSS
Friday
Earnings: Ferrellgas Partners
10:00 a.m. Wholesale trade