Dow Jones gives up 26,000 as huge rally fades

Last Updated Jan 16, 2018 4:18 AM EST

After U.S. markets surged higher in early trading on Tuesday morning -- with the Dow Jones industrials average topping 26,000 for the first time ever -- share prices reversed and then fell into the red. All the major U.S. indexes wound up closing lower.

Losses by industrial and energy companies helped pull U.S. stocks lower. But health care stocks were among the gainers as investors sized up the latest company earnings and deal news.  

The 26,000 milestone came just two weeks after Dow hit a record 25,000 -- the fastest ever thousand-point gain for the index. 

The Standard & Poor's 500 index fell 10 points, or 0.4 percent, to close at 2,776. The Dow Jones industrial average ended off 10 points, less than 0.1 percent, to end at 25,792. It was up as much as 282 points earlier. The Nasdaq shed 37 points, or 0.5 percent, finishing at 7,224. The Russell 2000 index of smaller-company stocks gave up 16 points, or 1 percent, to close at 1,576.

Investors were watching for the impact of Washington's latest tax changes on U.S. companies as earnings season for the final quarter of 2017 gets into full swing. Many multinational corporations are taking one-off charges for bringing home money held abroad. But investors expect them to benefit in the long run from the decision to cut the standard tax rate from 35 percent to 21 percent and are bidding up their share prices.

"A big concern is the market right now is: 'Is tax reform priced in?'" said Lindsey Bell, investment strategist at CFRA Research.

Industrial stocks accounted for much of the market's afternoon pullback. General Electric (GE) led the sector's decliners, sliding 2.9 percent after the company said it was taking a $6.2 billion charge related to its insurance portfolio and could consider breaking itself up. GE lost 55 cents to end at $18.21.

Benchmark U.S. crude fell 52 cents to settle at $63.80 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oil, shed 99 cents, or 1.4 percent, to $69.27 in London.

The slide in oil prices weighed on energy sector stocks. Range Resources (RRC) closed down 80 cents, or 4.5 percent, to $16.78.

Merck (MRK) led all other stocks in the S&P 500 as part of health care sector rally. Traders bid up shares in the drugmaker after it announced positive results from a clinical trial for a lung cancer treatment. The stock gained $3.41, or 5.8 percent, to end at $62.07.

Citigroup (C) rose 0.4 percent after the bank reported an $18.3 billion loss for the fourth quarter due to the new tax law. Excluding the one-time charges, Citigroup earned a profit. The stock was up 27 cents to $77.11.

Energizer Holdings (ENR) surged 14.5 percent after the company said it will acquire the battery and lighting assets of Spectrum Brands (SPB), which includes the Varta and Rayovac battery brands. Energizer shares added $7.49 to close at $59.11. Spectrum gained $4.75, or 4 percent, finishing at $125.23.

Bond prices rose. The yield on the 10-year Treasury fell to 2.54 percent from 2.55 percent late Friday.

The dollar edged higher after days of heavy losses. The U.S. currency was down to 110.37 yen from 110.52 yen on Monday. The euro rose to $1.2278 from $1.2181.

The price of bitcoin was down nearly 20 percent to $11,155, according to the tracking site CoinDesk. The price of the digital currency, which soared last year after starting 2017 under $1,000, has been hurt amid signs of potentially increased scrutiny from governments. South Korea's top financial policymaker said Tuesday that banning trading in digital currencies was an option, adding such a move still needed to be reviewed by government ministries.