Wall Street new year rally pauses as healthcare, bank stocks weigh

(Reuters) – The benchmark S&P 500 opened lower for the first time in 2018 on Monday, as losses in healthcare and financial stocks cut short Wall Street’s strongest start to a year in a decade.

The S&P and the Nasdaq last week recorded its strongest first four trading days in a year since 2006, and the Dow industrials posted its best since 2003.

“We had a strong market in the past week, and what generally happens in the first week sets the trend for the remainder of the year. Now that it’s established, there could be some profit- taking,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

At 9:41 a.m. ET, the S&P 500 .SPX was down 2.84 points, or 0.10 percent, at 2,740.31.

The Dow Jones Industrial Average .DJI was down 31.55 points, or 0.12 percent, at 25,264.32, and the Nasdaq Composite .IXIC was down 4.19 points, or 0.06 percent, at 7,132.37.

The Dow and the Nasdaq still eked out record highs briefly after open.

The dollar inched higher against a basket of major peers .DXY with data showing that slower U.S. jobs growth did little to dent expectations for further interest rate increases this year.

Comments by some Federal Reserve officials on Friday and over the weekend suggested the U.S. central bank remained on track to raise interest rates in 2018.

“The dollar is reversing and we’re seeing that effect due to some Fed comments,” Cardillo said.

A stronger dollar tends to weaken revenue of U.S. companies that earn much of its income from abroad.

Investors are waiting for earnings reports to see how much companies would benefit from the recent tax cuts. The fourth quarter earnings season will kick off later this week, starting with big banks.

Bank of America (BAC.N), Goldman Sachs (GS.N), JPMorgan and Wells Fargo (WFC.N) were down between 0.4 percent and 1 percent. Most big U.S. lenders have estimated one-off charges to their fourth quarter earnings on account of tax cuts.

The S&P healthcare index .SPXHC fell 0.5 percent and was the biggest decliner among major S&P sectors, led by 1.6 percent drop in AbbVie’s shares (ABBV.N) and a 1 percent fall in UnitedHealth’s (UNH.N).

Caterpillar (CAT.N) climbed 0.9 percent to open at a record high after JP Morgan upgraded the stock saying the tax overhaul could help construction business cycle to extend into 2018.

Amazon (AMZN.O) rose about 2 percent after Credit Suisse hiked its price target on the online retailer’s stock.

Shares of Nvidia (NVDA.O) climbed about 4 percent after the graphics chipmaker announced partnership with Uber and Volkswagen as its artificial intelligence platforms expand into technology for self-driving cars.

Pandora Media (P.N) slipped about 8 percent after Morgan Stanley downgraded its stock to “equal-weight” on concerns about slowing advertising revenue in 2018.

Declining issues outnumbered advancers on the NYSE by 1,659 to 971. On the Nasdaq, 1,711 issues fell and 860 advanced.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur

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