Wall Street retreats from records to end lower

Wall Street lost ground, pulling back from the prior session's record closing highs and Treasury yields edged lower on Tuesday as investors trained their focus on the approaching earnings season and the Federal Reserve's economic outlook.

All three major US stock indexes closed in the red, led by the blue-chip Dow, which notched an all-time closing high on Monday.

"It's a normal follow-on to a strong day," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. "The market is catching its breath from the job number and a strong day like yesterday, which reflected a high in the market."

Indeed, Friday's blockbuster US jobs report was followed on Monday by PMI data showing the services sector's fastest expansion on record. This was followed by a PMI report from China that confirmed activity in its services sector is accelerating.

The market often takes a breath as earnings season draws near, a first-quarter results will be significant, marking the anniversary of the coronavirus outbreak.

"How the market digests those first year-over-year comps remains to be seen," Keator added. "Generally speaking, it's understandable to have a positive outlook based on a significant amount of pent-up demand."

The US Federal Reserve is expected to release the minutes from its last monetary policy meeting on Wednesday and market participants will parse it for any changes to the central bank's economic outlook.

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"The market is going to be dissecting (Federal Reserve Chairman Jerome) Powell’s comments to see if there's anything embedded in them that might reflect a change in policy," Keator said.

The Dow Jones Industrial Average fell 96.95 points, or 0.29 per cent, to 33,430.24, the S&P 500 lost 3.97 points, or 0.10 per cent, to 4,073.94 and the Nasdaq Composite dropped 7.21 points, or 0.05 per cent, to 13,698.38.

European stocks closed at a record high, having recovered all pandemic-related losses as investors bet on a speedy global economic recovery.

The pan-European STOXX 600 index rose 0.70 per cent and MSCI's gauge of stocks across the globe gained 0.18 per cent.

Emerging market stocks rose 0.61 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.7 per cent higher, while Japan's Nikkei lost 1.30 per cent.

US Treasury yields dipped, with 5-year notes leading the decline, on investor views that market pricing based on an earlier-than-expected tightening by the Fed was too aggressive.

Benchmark 10-year notes last rose 18/32 in price to yield 1.6578 per cent, from 1.72 per cent late on Monday.

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The 30-year bond last rose 28/32 in price to yield 2.3199 per cent, from 2.363 per cent late on Monday.

The dollar slipped to a two-week low against a basket of world currencies, with traders taking advantage of its strong March performance as dropping Treasury yields pressured the greenback.

The dollar index fell 0.78 per cent, with the euro up 0.54 per cent to $1.1875.

The Japanese yen strengthened 0.39 per cent versus the greenback at 109.77 per dollar, while Sterling was last trading at $1.3829, down 0.49 per cent on the day.

Crude oil prices partially rebounded from the previous session's losses, lifted by strong data from the United States and China.

US crude gained 1.16 per cent to settle at $59.33 per barrel, and Brent settled at $62.74 per barrel, up 0.95 per cent on the day.

Gold prices touched their highest level in more than a week, benefiting from the soft dollar and lower Treasury yields.