US stocks closed a touch lower on 23 May as concerns over the Federal Reserve's next interest rate hike weighed on utilities. The major averages all closed less than 10 points lower, giving up earlier gains.
The Dow Jones Industrial Average dropped 8.01 points, or 0.05%, to settle 17,492.93. The latest decline marked the Dow's fourth drop in the past five days, noted MarketWatch. Losses on the blue-chip gauge were led by Microsoft Corp and Verizon Communications Inc. Earlier in the session, the Dow had risen nearly 50 points before coming off gains to drop lower.
The S&P 500 shed 4.28 points, or 0.21%, settling at 2,048.04 for its second loss in the past three days. The index was dragged lower by the utilities sector, which dropped 1% as the possibility of higher interest rates eliminated demand for dividend-paying stocks, MarketWatch reported.
"If you thought a rate hike was coming in June, you would unwind some of your yields plays, and utilities are a yield play," explained Mike Antonelli, equity sales trader at RW Baird & Co. The utilities sector led eight of the S&P's 10 sectors lower. However, materials closed up more than 1%, aided by gains of 4.4% in shares of CF Industries, which ended its merger with Dutch rival OCI NV, and Monsanto, which received a $62b (£42.8b; €55.2) all-cash offer by German drug maker Bayer, CNBC reported.
Meanwhile, the Nasdaq Composite slid 3.78 points, or 0.08%, to 4,765.78, marking its second decline in three days. Gains were led by Apple, which closed off session highs to end 1.27% higher after reports that it had asked suppliers to produce more iPhone 7s than originally expected. However, gains were offset by drops in Microsoft, Facebook, Amazon.com and Alphabet.
The iShares Nasdaq Biotechnology ETF (IBB) closed off session highs but still up 0.7%.
Energy dropped 0.3% as US crude oil prices settled at their lowest in a week, MarketWatch noted. US crude oil futures for July delivery shed $0.33 (£0.23;€0.29), or 0.7%, at $48.08 (£33.20;€42.87) a barrel. The US dollar index was a touch lower, with the euro by $1.122 and the yen near 109.3 yen against the greenback.
"As long as the FX market stays calm, it's not going to be an issue (for stocks). Same thing with crude," Jeremy Klein, chief market strategist at FNB Securities, told CNBC.
Gold futures for June delivery dropped $1.40 (£0.97;€1.25) to settle at $1,251.50 (£864.09;€1115.77) an ounce.
Overseas, European stocks closed lower and Asian stocks closed mixed. The Shanghai Composite rose 0.6%, while the Nikkei 225 dropped about half a percent. The Hang Seng Index also dropped 0.2%.
Several Federal Reserve officials are expected to speak this week, with Fed Chairwoman Janet Yellen slated to speak on Friday (27 May).