U.S. stocks mostly declined on Tuesday, with Wall Street slipping after a two-session rise that had the Dow Jones Industrial Average hitting a record close and the S&P 500 coming to within a point of its all-time finish, as Wall Street considered the timing of any moves by the Federal Reserve to curb stimulus.
"The market was struggling to advance, after coming too far, too fast," said Mark Luschini, chief investment strategist at Janney Montgomery Scott, of the ongoing advance that has the S&P 500 up nearly 24 percent for the year.
After fluctuating on either side of neutral, the Dow Jones Industrial Average fell 32.43 points, or 0.2 percent, to 15,750.67, with Travelers Companies pacing losses that included 17 of its 30 components.
Financials and utilities led sector losses on the S&P 500, which lost 4.2 points, or 0.2 percent, to 1,767.69. The Nasdaq gained a fraction to 3,919.92, after fluctuating on either side of neutral for portions of the session.
Decliners outpaced advancers nearly 2-to-1 on the New York Stock Exchange, where 653 million shares traded. Composite volume approached 3.2 billion.
"I wouldn't mind seeing the market consolidate here and then be ready for some acceleration," said Tom Lee, JPMorgan's chief U.S. equity strategist. There could be a slight pullback by the end of the year, with the S&P possibly dipping back to 1,700, Lee added. "I think we could see something like that; it could be an entry point."
US Airways and American Airlines reached agreement with the U.S. Justice Department that has the airlines giving up airport slots to clear the way towards their merger.
D.R. Horton rallied after the home builder reported quarterly revenue that beat expectations.
Shares of News Corp. fell after the publisher of the Wall Street Journal late Monday reported less-than-expected revenue; Dish Network rose after the company posted quarterly results that beat estimates as it added far more pay-TV subscribers than anticipated.
The U.S. dollar edged higher against a basket of other global currencies including the yen, while borrowing costs reflected in the 10-year Treasury note rose, with the yield on the benchmark added 2 basis points to 2.77 percent.
On the New York Mercantile Exchange, crude-oil futures for December delivery fell $2.10, or 2.3 percent, to $93.04 a barrel, its lowest settlement since May 31; Gold futures for December delivery fell $9.90, or 0.8 percent, to $1,271.20 an ounce.
Both the Dow and the S&P 500 have hit record heights, the latter at the end of October, as the Federal Reserve held off on reducing its $85 billion in monthly asset purchases, also known as quantitative easing. And, better-than-expected corporate earnings and the most recent jobs report bolstered the view that the economy could be strong enough to handle Fed tightening.
The National Federation of Independent business on Tuesday reported small business optimism declined last month, as companies scaled back on hiring plans in the face of the partial government shutdown.
The small business survey, and the Chicago Fed National Activity Index, which "flat-lined" were likely not enough in and of themselves to push equities lower, said Luschini. "It's more of a pause, and maybe even the market is in the throes of a corrective process more than anything else," he added.
Richard Fisher, President of the Federal Reserve Bank of Dallas, told CNBC on Tuesday that the Fed's stimulus program could not continue forever.
"We've changed and impacted the markets because of our intervention and I understand there's sensitivity, but markets should also bear in mind that this program cannot go on forever," said Fisher, who is in Melbourne speaking at an Economic Development for Australia function.
"Maybe him repeating, or bringing the message forward for those who hadn't heard it" hit investor sentiment, said Luschini, referring to a report from Bloomberg News that had Atlanta Federal Reserve President Dennis Lockhart saying the central bank could tighten monetary policy in December.
"I think it's possible, I don't think it's plausible," said Luschini, who believes the Fed is more likely to start reducing its monthly asset purchases in March.
The CBOE Volatility Index (VIX), a gauge of investor uncertainty, climbed to within reach of 13, a low level by historical standards.In China, government officials ended a four-day gathering held to plan economic reforms, saying the would let markets take on a larger part in deciding where resources go.
—By CNBC's Kate Gibson
Coming Up This Week:
TUESDAY: Earnings from MBIA, Ascent Capital, Babcock & Wilcox, Potbelly, Sina WuXi Pharma
WEDNESDAY: Mortgage applications; Fed's Pianalto speaks; 10-year Treasury note auction; Earnings from Macy's, Canadian Solar, Cisco Systems, NetApp, NetEase, Envision Healthcare, Kinross Gold, SeaWorld
THURSDAY: International trade; jobless claims; productivity and costs; Fed's Plosser speaks; natural gas inventories; oil inventories; 30-year bond auction; Earnings from Wal-Mart, Helmerich & Payne, Kohl's, Tyco, Viacom, Vivendi, Agilent, Applied Materials, Nordstrom
FRIDAY: Empire State manufacturing survey; import/export prices; industrial production; wholesale trade
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