NEW YORK (AP) -- A bad day for bank stocks pulled the Dow Jones industrial average to its third straight loss Tuesday as many of the patterns that have propelled markets since Election Day last year snapped into reverse.
The Dow Jones industrial average fell 58.96 points, or 0.3 percent, to 19,826.77, cutting into the gain it had made since Donald Trump's surprise victory in November. The Standard & Poor's 500 index fell 6.75, or 0.3 percent, to 2,267.89. The Nasdaq composite fell 35.39, or 0.6 percent, to 5,538.73.
The main culprit for the weakness was the financial sector, whose 2.3 percent drop was nearly triple that of any of the other 10 sectors that make up the S&P 500. The losses came even though Morgan Stanley on Tuesday morning joined the list of banks to report better-than-expected earnings for the fourth quarter.
Part of the reason for the losses was likely Tuesday's drop in bond yields. Bank stocks have often been trading in the opposite direction of bond yields, and the yield on the 10-year Treasury note fell to 2.32 percent from 2.38 percent late Friday. Yields on two-year and 30-year Treasurys also sank.
Another reason may lie in how well bank stocks had been performing in the months earlier: Financial stocks in the S&P 500 jumped 17 percent in the two months following the election, more than any other sector in the S&P 500.
"You're seeing a day where stocks that have been strong are pulling back a little bit, and investors are putting money into some of the laggards," said Mike Barclay, senior portfolio manager for Columbia Threadneedle Investments.
Companies that sell everyday items to consumers logged the biggest gains of the day, with those in the S&P 500 up 1.3 percent. They're also the ones that have struggled the most since Election Day.
Among them was tobacco company Reynolds American. It rose $1.71, or 3.1 percent, to $57.68 after British American Tobacco said it would buy the remaining 57.8 percent of the company that it doesn't already own. British American Tobacco said it will pay $59.64 per share in cash and stock.
Utility stocks, which have also lagged the market since Election Day, did well. Those in the S&P 500 rose 1.2 percent, aided by the drop in Treasury yields. When bonds are paying less in interest, dividend-paying stocks become more attractive to income investors, and utilities have some of the largest dividend yields.
NRG Energy rose 74 cents, or 5.1 percent, to $15.34 and was one of the top-performing stocks in the S&P 500 after an investment firm run by activist investor Paul Singer disclosed an ownership stake in the power company.
The biggest gain in the S&P 500 came from Noble Energy, which rose $2.66, or 7.1 percent, to $40.05. The oil and gas company agreed to buy Clayton Williams Energy for $2.7 billion in stock and cash.
Nearly as many stocks rose on the New York Stock Exchange as fell, but the outsized losses for bank stocks were enough to drag indexes lower.
The dollar also fell against most of its rivals, including the Japanese yen, euro and Canadian dollar. Its sharpest drop came against the British pound, which rallied after British Prime Minister Theresa May gave a highly anticipated speech about her country's pending departure from the European Union. One British pound bought $1.2396 as of Tuesday afternoon, up sharply from $1.2190 late Friday.
May said in her speech that the U.K. will make a clean break from the European Union and depart its single market. She also acknowledged for the first time that Britain's Parliament will be able to vote on the final deal. Uncertainty about the pending divorce has shaken investors since June, when the U.K. voted to quit the European Union. The pound remains more than 15 percent weaker against the dollar than it was in June.
Benchmark U.S. crude oil rose 11 cents, or 0.2 percent, to $52.48 per barrel. Brent crude, used to price international oils, fell 39 cents, or 0.7 percent, to $55.47.
Natural gas fell a fraction of a penny to $3.412 per 1,000 cubic feet.
Gold rose $16.70 to $1,212.90 per ounce, up 1.4 percent. Silver rose 38 cents to $17.15 per ounce, and copper fell 1 cent to $2.63 per pound.
In Asia, markets were. Japan's Nikkei 225 index fell 1.5 percent, while South Korea's Kospi rose 0.4 percent and Hong Kong's Hang Seng index gained 0.5 percent. In Europe, the French CAC 40 fell 0.5 percent, and the German DAX fell 0.1 percent. In London, the FTSE 100 fell 1.5 percent.