U.S. equities fell on Monday as worries about the White House's policy agenda lingered, while earnings season continued.
"We went from rallying on what might happen to looking for something more specific," said Ernie Cecilia, CIO at Bryn Mawr Trust, adding this is especially true for corporate tax cuts. "The market is now in this period of evaluation. I don't know how long that will last."
The Dow Jones industrial average dropped around 20 points, with Home Depot contributing the most losses. The S&P 500 fell 0.2 percent, snapping a three-day winning streak, with energy falling around 1 percent to lead decliners. The Nasdaq composite slipped 0.1 percent.
"Analysts have started to recognize that Donald Trump and Congress will likely encounter delays when implementing a highly anticipated fiscal stimulus," said Jeremy Klein, chief market strategist at FBN Securities. "With the forward multiple for the S&P 500 hovering at its cyclical peak and my most reliable sentiment statistics soaring to their highest point since March, everything must fall into place for the rally to continue its ascent."
"With the forward multiple for the S&P 500 hovering at its cyclical peak and my most reliable sentiment statistics soaring to their highest point since March, everything must fall into place for the rally to continue its ascent," Klein said in a note.
Since Nov. 8, U.S. stocks have staged a sharp rally as investors anticipated corporate tax cuts, government spending and deregulation.
"I don't know that the market is wrong in going up, but we can't quantify yet how big an impact these policies will have on the bottom line" of companies, said Nick Raich, CEO at The Earnings Scout.
But the Trump administration has recently focused on immigration and trade policy. On Sunday, the 9th U.S. Circuit Court of Appeals denied the Justice Department's request to reinstate an executive order that barred entry into the U.S. citizens from seven Muslim-majority countries.
U.S. Treasury prices appreciated Monday, pushing the benchmark 10-year note yield lower to 2.419 percent and the short-term two-year note yield to 1.161 percent. Gold prices also rose, with futures for April delivery gaining $11.30 to settle at $1,232.10 per ounce.
"I think this reflects the general uncertainty with what the administration can do," said Bruce McCain, chief investment strategist at Key Private Bank. He also said that, while corporate earnings have improved, they have not to the extent the market anticipated. "As much as the market wants to run on hope, at some point results have to drive things."
The three major U.S. indexes closed around all-time highs on Friday, with the Dow recording its best trading session of the year. "The market really had a superb day, so some profit-taking might be taking place," said Peter Cardillo, chief market economist at First Standard Financial. "The market might have moved too high too fast Friday."
There are no major economic reports due Monday.
On the earnings front, toy maker Hasbro reported better-than-expected earnings and revenue. Companies scheduled to report Monday after the bell include 21st Century Fox, Tesoro and Boardwalk Pipeline.
Overseas, European equities fell amid political uncertainty in France, as the pan-European Stoxx 600 index slipped 0.68 percent.
"Frexit is a major threat for the Eurozone and Le Pen's (far right leader in France) anti-globalisation rhetoric has gained a lot momentum in France and this can shake the core of the Eurosystem," said Naeem Aslam, chief market analyst at Think Markets, in a note to clients.
In Asia, stocks closed mostly higher, with the Shanghai composite rising 0.54 percent and the Nikkei 225 advancing 0.31 percent.
The dropped 4.86 points, or 0.21 percent, to end at 2,292.56, with energy leading nine sectors lower and industrials and information technology rising.
The Nasdaq composite fell 3.21 points, or 0.06 percent, to 5,663.55.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 769 million and a composite volume of 3.094 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.3.
On tap this week:
Earnings: 21st Century Fox, Tesoro, Boardwalk Pipeline
4:30 p.m. Philadelphia Fed President Patrick Harker
Earnings: Disney, Gilead Sciences, BP, General Motors, Archer Daniels Midland, Cardinal Health, Statoil, BNP Paribas, Intercontinental Exchange, Michael Kors, Vulcan Materials, Tenneco, Wellcare Health, Mondelez International, Buffalo Wild Wings, Plains All American, Pioneer Natural Resources, Panera Bread, Zillow
8:30 a.m. International trade
10:00 a.m. JOLTs
1:00 p.m. 3-year note auction
3:00 p.m. Consumer credit
Earnings: Time Warner, Glaxo SmithKline, Whole Foods, Prudential Financial, Carlyle Group, Alaska Air, Humana, Allergan, Rayonier, Suncor, Lions Gate, Owens Corning, Sanofi, Level 3 Communications, Jacobs Engineering
1:00 p.m. 10-year note auction
Earnings: Coca-Cola, Kellogg, Twitter, Yum Brands, Beazer Homes, Cummins, Total, Agrium, Occidental Petroleum, Nissan, Borg Warner, Dunkin Brands, Expedia, News Corp, Nvidia, Pandora Media, Activision Blizzard, Thomson Reuters, KKR
8:30 a.m. Initial claims
9:10 a.m. St. Louis Fed President James Bullard
10:00 a.m. Wholesale trade
1:00 p.m. 30-year bond auction
1:10 p.m. Chicago Fed President Charles Evans
Earnings: Aon, Calpine, Buckeye Partners, ArcelorMittal, Ventas, Nippon Telegraph, Interpublic
8:30 a.m. Import prices
10:00 a.m. Consumer sentiment
2:00 p.m. Factory orders