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[BENGALURU] Wall Street receded from record highs on Monday as a drop in healthcare stocks offset gains caused by higher oil prices and a strong jobs report.
A rally to several all-time highs since late June has left the S&P 500 up nearly 7 per cent in 2016, with many investors concerned about stretched valuations.
"This is a natural pause for reflection by the markets. Everyone is sitting there saying 'Holy cow, what did we do?'," said Brad McMillan, chief investment officer at Commonwealth Financial Network.
"Momentum is a big part of it. People are afraid of missing out." Pressured by losses in Bristol-Myers, Merck and Allergan, the S&P 500 healthcare index dipped 0.9 per cent while the Nasdaq biotech index dropped 1.1 per cent.
Oil prices rose more than 2 per cent after a report last week indicated some OPEC members had called for a freeze in production.
Investors fretted about growing signs that S&P 500 aggregate earnings could decline for a sixth straight quarter.
Analysts polled by Reuters expect third-quarter earnings to fall 0.2 per cent, as of Monday. They had estimated a 0.2 per cent rise on Aug 3.
The S&P 500 opened at a record high before turning modestly negative and closing down 0.09 per cent at 2,180.89.
The Dow Jones industrial average edged down 0.08 per cent to end at 18,529.29.
The Nasdaq Composite dropped 0.15 per cent to 5,213.14.
It was one of the year's slowest sessions. About 5.86 billion shares changed hands in US exchanges, compared with the 6.56 billion daily average over the last 20 sessions.
Seven of the 10 major S&P 500 indexes fell, with the healthcare group losing the most. The energy index gained 1.22 per cent, with Exxon Mobil up 1.18 per cent and Schlumberger climbing 1.6 per cent.
Bristol-Myers fell for the second straight day, shedding 4.71 per cent after it said on Friday its lung-cancer drug failed a key late-stage study. It was the strongest contributor to the S&P 500's loss.
Merck, which makes a rival drug, fell 1.57 per cent. The stock had rallied 10 per cent on Friday.
Allergan lost 2.18 per cent after it slashed its full-year revenue forecast and said it was not looking to use its surplus cash to fund any deals.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-one ratio; on Nasdaq, a 1.10-to-one ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 96 new highs and 18 new lows.