Investors move to grab profits before the end of third quarter
US stocks took a breather after last week's records, ending a volatile few days in the red as some investors snapped up profits before the third quarter closes.
In four of the five days, the Dow finished the trading session with swings of more than 100 points in either direction, a shift from the low-volatility trend of much of 2014.
In the end, the Dow fell 166.59 points (0.96 per cent) to 17,113.15. The broad-based S&P 500 dropped 27.55 (1.37 per cent) to 1982.85, while the tech-rich Nasdaq Composite Index declined 67.60 (1.48 per cent) to 4512.19.
Analysts cited myriad reasons for the pullback.
This week's move by the US and allies to bomb jihadists in Syria, coupled with President Barack Obama's sober speech at the United Nations on the threat of militants, underscored that the US response "could be a long, drawn-out process", said Bill Lynch, director of investment at Hinsdale Associates.
Russia also remained on the radar screen, as investors speculated on President Vladimir Putin's response to tougher US and European sanctions on the country.
US economic data was mixed, with sales of new single-family houses surging to their highest level in more than six years and the Commerce Department revising second-quarter economic growth to an annual rate of 4.6 per cent, from 4.2 per cent.
On the downside, US durable goods orders plunged 18.2 per cent due to a big drop in the volatile transportation sector.
But most of the US economic reports came in as expected, said Lynch, who characterised the week's newsflow as far more sedate after last week's Scotland independence vote and Alibaba's initial public offering.
"This week the market was pretty much devoid of anything major," he said. "There was a combination of all these little factors that when added up caused some volatility."
Art Hogan, chief market strategist at Wunderlich Securities, said the jerkiness in trade was "really typical of volatility at the end of the quarter" as investors square positions and take profits.
Hogan said the outlook for the US economy still looks solid, but that the rising US dollar remains a concern for US markets, in part because US dollar-denominated commodities like oil are weighed down by a strong dollar.
Apple endured a bruising on Friday, dropping 3.8 per cent after a glitch in its newest operating system and complaints that its latest iPhone models bend easily.
But on Saturday, the tech giant rallied 2.9 per cent as it released a new version of a software update that had earlier caused glitches in iPhones.
Apple also denied the charge over bending, saying it had only received nine complaints in millions of sales.
Pharmaceutical stocks retreated after the US Treasury Department on Wednesday unveiled new tax rules designed to curb inversion deals, in which US companies merge with foreign businesses to relocate in a lower tax address.
Medical equipment firm Medtronic, planning a US$43 billion ($54.6 billion) inversion merger with Covidien that would transfer its tax domicile to Ireland, finished the week 4.3 per cent lower.