U.S. stocks fell from record levels on Monday as a decline in General Electric shares weighed on investor sentiment. Wall Street was also gearing up for the busiest week of the earnings season.
The company reported earnings on Friday which fell short of analysts' expectations as profits were undermined by restructuring and weak performance at its oil and gas businesses. Analysts also panicked on Monday over the possibility GE may have to cut its dividend.
Morgan Stanley analyst Nigel Coe lowered his rating on GE to underweight from equal weight and cut his price target to $22 from $25.
"The reduction to our target price is driven by a substantial cut to earnings expectations," Coe said in a note to clients. "We also see a higher probability of a dividend cut that we do not view as priced in. We believe investors need to take action to protect against the possibility of near term underperformance in the event of a dividend cut in November and this is clearly an additional factor in our rating change."
The S&P 500 declined 0.4 percent to close at 2,564.98, with industrials and telecommunications lagging. Hasbro was the second-worst-performing stock in the S&P 500, falling 8.6 percent after the company warned of weaker holiday-season sales due to the bankruptcy of its largest customers, Toys 'R' Us.
The Nasdaq composite finished 0.6 percent lower at 6,586.83, as shares of Amazon, Facebook, and Alphabet all fell. The tech-heavy index, along with the Dow and S&P 500, hit intraday records earlier in the session.