US stocks retreated on Thursday, led by financial stocks, while Caterpillar shares dropped following news that federal officials searched its Illinois facilities. Caterpillar, down 4.3 percent at $94.36, was the biggest drag on the Dow and among the biggest negatives for the S&P 500. In a statement issued after the closing bell, Caterpillar said the search may be related to an Internal Revenue Service investigation on profits earned by a Swiss subsidiary.
Financials led the decline among sectors in the S&P 500, which had its biggest daily percentage decline since Jan. 30. The S&P financial index .SPSY fell 1.5 percent in its biggest daily drop since mid-January.
Bank stocks had surged on Wednesday on increased expectations that the Federal Reserve will hike interest rates this month. The S&P 500 and the Nasdaq had their best day since the November election after U.S. President Donald Trump’s measured tone in his first speech to Congress lifted optimism.
“It was an awfully strong rally yesterday without necessarily a lot of real news to justify it, so I think you’re just getting some profit taking today,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
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He said investors also appeared to be rotating into sectors that have not done as well in the post-election rally, including S&P utilities .SPLRCU, up 0.7 percent.