The Standard & Poor's 500 Index touched a fresh record high, as US retail sales unexpectedly rose in April, before giving up gains.
In afternoon trading in New York, the Dow Jones Industrial Average fell 0.21 per cent, while the S&P 500 slipped 0.07 per cent. The Nasdaq Composite Index eked out a 0.07 per cent gain. The S&P 500 touched a record high of 1,636.0 earlier in the session.
Retail sales posted a surprise gain last month, increasing 0.1 per cent following a 0.5 per cent decline in March. Economists polled by Reuters and Bloomberg had predicted a 0.3 per cent drop.
"Those who doubt that the Federal Reserve is making an impact just need to look at debt restructuring and wealth effects on spending," Diane Swonk, chief economist at Mesirow Financial in Chicago, told Reuters. "There is no way the consumer would be holding up so well without the support of lower interest rates."
Still it's not just the resiliency of the American consumer that has bulls seeing more room for gains.
"Valuation and sentiment are much more reasonable," Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, told Bloomberg. Valuations remain more than a quarter lower than in the last half of the 1990s, according to Bloomberg calculations.
In Europe, the benchmark Stoxx 600 Index ended the day with a 0.2 per cent decline from the previous close. Elsewhere, the UK's FTSE 100 advanced 0.1 per cent, while France's CAC 40 shed 0.2 per cent. The DAX edged 0.01 per cent higher to close at a record.
The DAX was held back by a drop in the shares of Commerzbank, which is expected to sell new shares this week as part of a massive capital plan, a German newspaper reported.
On Wednesday a report is expected to show the euro-zone economy contracted for a sixth consecutive quarter in the first three months of 2013.
Meanwhile, China's production increased 9.3 per cent in April from a year earlier, falling short of forecasts and bolstering concern about the pace of growth in the world's second-largest economy.
"There has been a deceleration of economic activity in China," Philip Orlando, the New York-based chief equity strategist at Federated Investors, told Bloomberg. "We don't see a hard landing, but it's a legitimate fear. Everyone is concerned about China slowing."
China also was impacting the oil market. Brent crude was 70 cents lower at US$103.21 per barrel at midday in New York, after trading as low as US$102.25. US oil fell 74 cents to US$95.30 a barrel.
