Wall Street slips after seven day rally, warning on Europe
US stocks sagged on Tuesday as investors paused after a seven-session string of gains and the Bundesbank's chief warned the euro zone's crisis has not ended.
On Wall Street, investors' confidence has grown in recent months, leading to a gain of more than 10pc for the year by the Dow and nearly 9pc by the S&P 500. Signs of improvement in the economy and the Federal Reserve's quantitative easing have helped to drive the advance.
Heading into Tuesday, both the Dow and benchmark S&P 500 index had rallied for seven consecutive sessions, with the Dow closing at another record high on Monday. The S&P is within reach of its all-time closing high of 1,565.15, set on Oct. 9, 2007.
"It's natural to have pauses," said John Fox, co-manager of the FAM Value Fund in Cobleskill, New York.
Adding to the weakness, Jens Weidmann, head of Germany's central bank and a member of the European Central Bank's governing council, said the euro zone crisis was not over.
Pullbacks during the rally so far this year have not been too deep as investors look for a good place to buy. Market moves have also been more muted in recent days, even as stocks have ground higher.
"The individual days are not huge ... but certainly if you string a few of them together, it's a nice increase in stock prices," said Fox.
Tech shares, which have lagged the rally, pulled indexes lower as heavyweights such as Apple and Google tumbled. Apple dropped 1.7pc to $430.57 and Google fell 1.2pc to $824.87, while the S&P tech sector lost 0.8pc.
Offsetting the decline, the healthcare sector rose 0.3 percent. Traditionally considered a defensive bet, the sector has been one of the leaders of the rally so far this year, accelerating by nearly 12pc
In the short-term, however, healthcare appears to be overbought, suggesting investors may start to put their money elsewhere. Based on the relative strength index, healthcare has been overbought since the beginning of the month.
The Dow Jones industrial average slipped 14.16 points, or 0.10pc, to 14,433.13. The Standard & Poor's 500 Index fell 5.53 points, or 0.36pc, to 1,550.69. The Nasdaq Composite Index lost 18.66 points, or 0.57pc, to 3,234.22.