A decline in consumer discretionary shares dragged on U.S. stocks Wednesday.
The Dow Jones Industrial Average lost 68 points, or 0.3%, to 20908. The S&P 500 slipped 0.1%, and the Nasdaq Composite fell 0.2%.
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Consumer discretionary stocks in the S&P 500 declined 0.6%. Dow component Walt Disney fell 2.9% after late Tuesday reporting a smaller-than-expected increase in revenue for its fiscal second quarter.
Major stock indexes have gained in recent weeks as corporate earnings have exceeded analysts' expectations. U.S. companies have largely beat estimates, with most S&P 500 companies now having reported results, according to FactSet.
With the earnings season now drawing to a close, some investors said the Trump administration needs to deliver on proposed tax cuts for equity markets to climb further.
"We have had a very good reporting season, but...we really need the tax cuts" for equity markets to push higher, said Monica Defend, head of global asset allocation research at Pioneer Investments.
Ms. Defend said her team still owns U.S. equities, but they also hold hedges in the form of options contracts that protect against downside moves in equity and credit markets. The CBOE Volatility Index, or VIX, a widely watched measure of investor anxiety that focuses on S&P 500 options prices, closed at its lowest level since 1993 earlier this week.
The VIX's low level "is a signal [that] the market is complacent. The risk of a mistake on the political side is non-negligible," she said, adding that Mr. Trump's firing of the director of the Federal Bureau of Investigation could create tension between the administration and Congress.
Moves were muted after the unexpected firing of James Comey, though some investors expressed concern that Mr. Comey's departure could stoke tensions between the White House and Congress.
U.S. government bonds prices rose Wednesday. The yield on the 10-year Treasury note declined to 2.375%, according to Tradeweb, from 2.405% Tuesday. The WSJ dollar index, which measures the U.S. currency against a basket of 16 others, was down 0.1% recently.
The Stoxx Europe 600 rose 0.1% after closing on Tuesday at its highest level since August 2015.
Many investors see good reasons to be upbeat on European stocks. The European corporate earnings season is on track for its strongest quarter in a decade, according to a recent report from Morgan Stanley. Meanwhile, the victory of centrist Emmanuel Macron in French presidential elections has allowed investors to look past political risks and refocus on economic fundamentals.
"The French elections have loomed large...as a potential restraining force on risk appetite," said Michael Metcalfe, head of global macro strategy at State Street Global Markets.
"Assuming that earnings growth continues...and we see this expected rebound in the hard data" then markets can continue to push higher, he added.
South Korea's Kospi index fell 1% following the conclusion of presidential elections in that country. Moon Jae-in's victory in those elections on Tuesday has prompted investor caution given his support for closer ties with North Korea.
The Shanghai Composite Index lost 0.9% after a small gain on Tuesday snapped a five-day losing streak. Some analysts expect a high-profile regulatory crackdown to weigh on Chinese shares.
Japan's Nikkei Stock Average rose 0.3%, while Australia's S&P/ASX 200 reversed early losses to close 0.6% higher.
In commodity markets, oil prices rebounded after falling by more than 1% on Tuesday. U.S. crude oil gained 2.3% to $46.95 a barrel.
--Aaron Kuriloff contributed to this article.
Write to Christopher Whittall at email@example.com
(END) Dow Jones Newswires
May 10, 2017 10:55 ET (14:55 GMT)