Stocks Retreat from Record Highs

IndustriesDow Jones Newswires

Stocks edged lower Monday, threatening to snap what has been the Russell 2000's longest winning streak in 20 years.

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The index of small company shares has risen for 15 consecutive trading sessions through Friday. The gains began before the U.S. presidential election, but accelerated following Nov. 8 as investors poured money into U.S.-based companies. The bet has been that President-elect Donald Trump's policies could improve domestic growth, lower corporate taxes and increase infrastructure spending -- all of which may benefit smaller, U.S.-based companies that are typically found in the Russell 2000.

On Monday, the Russell declined 0.6%.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite also all edged lower Monday. These declines represent an unusual pullback for U.S. stocks after a weekslong rally that included Friday when all three indexes as well as the Russell closed at fresh records.

For the 12 trading sessions following the U.S. presidential election, the Dow industrials rose 4.5% through Friday's close and only fell two days.

The blue-chip index declined 0.2% on Monday.

The S&P 500 and the Nasdaq Composite slipped 0.2% on Monday.

The Stoxx Europe 600 fell 0.8%.

Indexes in both Europe and the U.S. were weighed down by falling bank stocks. Financial companies in the S&P 500 were among the worst-performing sectors, falling 0.8%.

Banks in the Stoxx Europe 600 fell 1.8% ahead of a Dec. 4 referendum on Italian constitutional reform.

Many investors are concerned that a "no vote" and the potential political uncertainty that follows could derail plans to shore up the country's fragile banking system. Recent polls suggest the proposed changes are likely to be rejected, an outcome that Prime Minister Matteo Renzi has said would prompt him to resign. Italy's FTSE MIB index dropped 1.8%.

Meanwhile, France's CAC-40 index fell 0.9%, roughly in line with its eurozone peers, after free market social conservative François Fillon won France's center-right primary over the weekend. The move positions him as the leading mainstream candidate to run against National Front leader Marine Le Pen in next spring's presidential election.

The oil and gas sector also struggled Monday as oil prices swung ahead of a meeting of major oil producers in Vienna. U.S.-traded crude recently gained 2.8% to $47.34 a barrel.

The Organization of the Petroleum Exporting Countries had agreed in September to trim production amid a global glut of supply, but left the details of who cuts how much to a meeting in Vienna on Wednesday.

"Speculation that OPEC would agree to production cuts spurred big increases last week, and we'll get this kind of back and forth until we get clarity on what exactly the deal is likely to be," said Ian Williams, strategist at brokerage Peel Hunt.

Oil prices had shed 4% on Friday, as expectations for a coordinated cut in global oil production began to fade after Iran and Russia emerged as potentially deal-breaking obstacles. Saudi Arabian oil officials said they wouldn't attend a meeting with Russia Monday, damping hopes for an agreement by the cartel.

In other markets, the dollar weakened a bit Monday after its best three-week stretch since 2008.

Emerging market currencies and the yen rose sharply against the dollar, sending the WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, down 0.3% on Monday.

Some investors said the pullback in the dollar was likely to prove temporary with inflation expectations on the rise and the Federal Reserve widely expected to raise interest rates in December and in 2017.

In government bond markets, the yield on the 10-year U.S. Treasury note fell to 2.321% from 2.359% on Friday.

Earlier, markets in Hong Kong and Shanghai advanced 0.5% after U.S. stocks notched fresh records on Friday. Australian shares declined 0.8%, however, alongside an earlier drop in oil prices.

Benoit Faucon contributed to this article.

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