SAN FRANCISCO -- U.S. stocks finished lower Monday after comments from Chicago Federal Reserve President Charles Evans knocked them from new all-time highs set earlier in the day.
The S&P 500 index finished down 1.18 points,or 0.1 percent, at 1,666.29, after touching a newhigh of 1,672.84 during the session.
The index traded as low as 1,663.52 in the afternoon after Charles Evans, president of the Federal Reserve Bank of Chicago, said that the central bank's policy stance is appropriate and that the improving economy still faces head winds. Evans is a voting member of the Federal Open Market Committee this year.
While defensive stocks have been dominating the
rally for most of the year, there's been new life in cyclical stocks recently, propelling the market into the "free skies" of record highs.
"Energy's been a laggard, but what you've seen in May is a shift into cyclicals driving the market higher," said Dan Greenhaus, chief global strategist at BTIG.
Energy is the third best-performing sector in May, behind financials and industrials.
The Dow Jones industrial average declined 19.12 points, or 0.1 percent, to close at 15,335.28.
Merck & Co. was the worst performer on the Dow, with a loss of 1.7 percent Monday.
General Electric Co. shares finished 0.5 percent higher after GE Capital Corp. said it would pay its parent company $6.5 billion in dividends and another $4.5 billion in special dividends in 2013.
Even small-cap stocks got in on the rallying action, with the Russell 2000 index topping 1,000 for the first time ever. The index finished up 1.7 points, or 0.2 percent, at 997.98, for a new record close.
In deal news, Yahoo Inc. said it would buy social-media site Tumblr for $1.1 billion. Yahoo shares gained 0.2 percent.
Meanwhile, Dallas Fed President Richard Fisher, who isn't a voting member of the Federal Open Market Committee, said the Fed can only slow the pace of its mortgage-backed securities, as a sudden stop would be "too violent" for the market.
On Wednesday, Fed Chairman Ben Bernanke is due to testify before Congress' Joint Economic Committee about the central bank's economic outlook, and the FOMC will release minutes from its most recent policy meeting.
"This big question is precisely when we'll see the market react to the imminent tighter monetary conditions," said Fawad Razaqzada, market strategist at GFT Markets.
"The longer the rally continues arguably, the bigger the reversion we face, but if the economic backdrop is robust enough, then perhaps the resulting pain will be short-lived," Razaqzada said in emailed comments.