Wall Street pulled back from record-high territory on Monday, weighed down by a drop in Merck shares, as investors assessed President Donald Trumpâ€™s plan for corporate tax cuts.
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U.S. stocks extended losses after a Bloomberg report that the House of Representatives was discussing a gradual phase-in for a corporate tax cut that Trump and his fellow Republicans favor.
Investors were also digesting the impact to Trumpâ€™s agenda from news that his former campaign manager, Paul Manafort, was charged with money laundering in the federal probe into Russian meddling in the 2016 presidential election.
â€œA lot of people are looking to that corporate tax cut as a reason for the next leg up in stocks,â€ said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
â€œWe are in a market that has just been on an absolute low-volatility, steady climb for quite a while, so you donâ€™t need much of a reason for it to take a periodic step back, particularly a small step back,â€ Meckler said.
The Dow Jones Industrial Average fell 72.95 points, or 0.31 percent, to 23,361.24, the S&P 500 lost 8.39 points, or 0.33 percent, to 2,572.68 and the Nasdaq Composite dropped 10.78 points, or 0.16 percent, to 6,690.48.
The tech-heavy Nasdaq touched an intraday record high earlier in the session before pulling back.
The S&P tech sector .SPLRCT rose 0.2 pct, following big gains on Friday in the wake of a strong batch of earnings.
Apple (NASDAQ:AAPL) shares gained 2.1 percent after analysts pointed to strong demand for the iPhone X.
Merck shares fell 5.6 percent after a setback to its key cancer medicine. The stock was among the top drags on the S&P 500 and Dow industrials.
In other corporate news, Japanâ€™s SoftBank Group Corp is planning to break off negotiations on a merger between subsidiary Sprint Corp (NYSE:S) and T-Mobile US (NASDAQ:TMUS) according to a Nikkei report. Sprint shares fell 9.7 percent and T-Mobile was off 4.6 percent.
Market watchers readied for another heavy week of corporate results. With more than half the S&P 500 reported, third-quarter earnings are expected to have climbed 6.7 percent, up from an expectation of 5.9 percent at the start of October, according to Thomson Reuters I/B/E/S.
Investors were also awaiting Trumpâ€™s pick to head the Federal Reserve. Trump is likely to choose Fed Governor Jerome Powell to replace Janet Yellen as head of the U.S. central bank, a source familiar with the matter said on Monday.
Declining issues outnumbered advancing ones on the NYSE by a 1.61-to-1 ratio; on Nasdaq, a 2.27-to-1 ratio favored decliners.