Wall Street's seven-day winning streak came to an end in a groggy return after the long Memorial Day weekend.
The S&P 500 was down 0.06% and the Nasdaq fell 0.1%, retreating from records and ending lower for the first time in eight sessions. The Dow Jones Industrial Average dropped 0.2%.
"Considering last week's broad gains in the equity markets, we would not be surprised to see a pause in the market's upward progression to allow some time to digest the latest record highs in the S&P 500 and the Nasdaq composite as well as allow investors to ponder their next move," John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, explained in a note.
The Nasdaq and S&P 500 just barely clinched new records on Friday in a quiet end to the week. The two indexes had also closed out Thursday's session with records on strength in retail earnings. Costco (COST) , Best Buy (BBY - Get Report) , Guess? (GES - Get Report) and Abercrombie & Fitch (ANF - Get Report) each posted positive quarters last week.
Crude oil came back from session lows ahead of its settlement, though still logged slight losses. Oil had fallen more than 1% earlier in the session as worries over global supply levels carried over into the new week. Crude had slumped on Thursday after an extension to a global output pact disappointed investors looking for more. The Organization of Petroleum Exporting Countries agreed in Vienna on a nine-month extension to a production-cut deal set to expire at the end of June. Goldman Sachs sees little growth in oil prices this year, projecting a level of $52.39 a barrel for 2017.
West Texas Intermediate crude fell 0.3% to $49.66 a barrel on Tuesday.
The energy sector remained the worst performer: Major oil producers including Exxon Mobil (XOM - Get Report) , Chevron (CVX - Get Report) , PetroChina (PTR - Get Report) , Statoil (STO) and ConocoPhillips (COP - Get Report) were lower. The Energy Select Sector SPDR ETF (XLE - Get Report) declined 1.4%.
Amazon (AMZN - Get Report) briefly eclipsed the $1,000 a share mark for the first time ever. Amazon's stock has surged 33% year to date, torching the Nasdaq's 15% gain. In large part, the bullishness on Amazon is being fueled by its disruption of industries from bricks-and-mortar retail to cloud computing.
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Consumer spending and personal incomes both rose in April, according to the Bureau of Economic Analysis. Spending grew 0.4%, its largest gain since December. Incomes increased 0.4%, double the rate seen in March. The U.S. savings rate held unchanged at 5.3%.
U.S. home prices advanced to their highest pace of growth in nearly three years, according to the S&P/Case-Shiller 20-city index. The index increased 5.9% over the three months to March, 100 basis points above economists' estimates.
Consumer confidence retreated in May as expectations for future economic conditions weakened. Confidence declined to 117.9 in May from a revised 119.4 in April, according to the Conference Board. Analysts had anticipated a reading of 119.
The Federal Reserve can continue to raise interest rates while also reducing its balance sheet this year, Dallas Fed President Robert Kaplan said on Tuesday. Kaplan, a voting member of the Federal Open Market Committee, anticipates two more interest-rate hikes this year.
Fed Governor Lael Brainard also sounded a hawkish call on Tuesday, arguing in favor of another rate hike soon. "With the labor market continuing to strengthen, and GDP growth expected to rebound in the second quarter, it likely will be appropriate soon to adjust the federal funds rate," she told the New York Association for Business Economics.
The U.S. jobs report on Friday could go some way toward cementing the chances of a rate hike later this month. The nonfarm payrolls report for May is expected to demonstrate continued strength in the labor market. The U.S. economy is expected to have added 175,000 jobs in May, while the unemployment rate is forecast to hold at 4.4%, according to FactSet estimates. Hourly earnings are anticipated to have risen 0.2% in May.
The Federal Open Market Committee, the monetary policy arm of the central bank, is next set to meet June 13-14. Markets already have high expectations for an interest-rate increase at the committee's next meeting, the second of three expected hikes this year. Wall Street has priced in a nearly 89% chance of a 25-basis-point increase, according to CME Group fed funds futures.
"The employment report will garner plenty of attention, but it is unlikely to move the Fed either way," said Kingsview Asset Management's Paul Nolte. "If anything, a "hot" report could engender calls for faster rate increases. More importantly than the jobs report will be the wage gains, which have been running at historically modest rates."
In other news, Ensco (ESV - Get Report) agreed to acquire Atwood Oceanics (ATW) in a deal that creates a company with combined value of $6.9 billion. Ensco will purchase Atwood for $10.72 a share in an all-stock purchase that values the company at a 32% premium to its Friday close. Ensco expects the deal to close in the third quarter.
Chipotle (CMG - Get Report) has determined that customers could have been compromised by a cyberattack across 48 U.S. states after completing a probe with cybersecurity firms and law enforcement. The burrito chain had its payment systems hacked between March 24 and April 19. In some cases, the stolen data contained customers names in addition to their card numbers, expiration dates and verification codes.
BlackBerry (BBRY) fell after Raymond James downgraded its rating on the stock to market perform from outperform. Analysts said they are "tapping the brakes" after the company's 42% rise since its last ratings update in August.
TiVo (TIVO - Get Report) jumped 14% on Tuesday after a favorable ruling in a patent case against Comcast (CMCSA - Get Report) . A judge gave an initial ruling that found that Comcast, Arris and Technicolor had violated two of TiVo's patents.
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