(AP) -- Losses among Boeing, General Electric and other big industrial companies weighed on U.S. stocks Thursday, pulling the market below the record highs it set the day before.
Energy stocks contributed to the modest decline following a slide in crude oil prices. Technology companies accounted for the biggest gains. Bond yields climbed to their highest level since March as demand for bonds waned.
Investors kept an eye on the latest company earnings news while also monitoring developments in Washington ahead of a possible federal government shutdown this weekend.
The market's dip from its latest highs represents "just a little setback," said Craig Callahan, chief investment officer at ICON Advisers. "We're still bullish and expect the market to move higher over the next year."
The Standard & Poor's 500 index fell 4.53 points, or 0.2 percent, to 2,798.03. The Dow Jones industrial average lost 97.84 points, or 0.4 percent, to 26,017.81. The Nasdaq slid 2.23 points, or 0.03 percent, to 7,296.05. The Russell 2000 index of smaller-company stocks gave up 9.93 points, or 0.6 percent, to 1,576.73.
Losers outnumbered winners by almost three to one. Trading in declining stocks also was more than twice as heavy as it was in shares that rose.
The major indexes, which hit record highs Wednesday, wavered between small gains and losses for much of the day as investors continued to size up company earnings and economic data.
The Commerce Department said Thursday that grounbreakings on new U.S. homes declined in December to a seasonally adjusted annual rate of 1.19 million units. The drop was a reversal from robust gains for October and November.
Traders also kept tabs on Washington, where Republicans and Democrats scrambled to avert a possible federal government shutdown before a midnight Friday deadline.
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Republicans were trying to pass a funding bill that would prevent the shutdown of federal agencies, but Democrats threatened to vote against the bill unless the White House and GOP lawmakers include protections for younger immigrants who were brought to the U.S. illegally as children.
A shutdown could have a negative impact on consumer spending and financial conditions, though it's unlikely that it would cause lasting or broad damage to the economy, Credit Suisse economists concluded in a note published Thursday.
As for the Wall Street impact, a shutdown could sap some of the momentum that helped drive the stock market to new highs this week, said J.J. Kinahan, chief market strategist at TD Ameritrade.
"If you're going to shut down the government right after that, it's really the kind of thing that would just suck the confidence out of the market overall."
Bond prices fell. The yield on the 10-year Treasury climbed to 2.63 percent from 2.59 percent late Wednesday.
"You're in a little bit of a tough spot with bonds," said Kinahan. "Do you want to buy bonds of a government that's shut down? Yet you want to go for bonds whenever you're looking for protection, and the last time the government shut down, bonds actually rallied."
A slide in industrials stocks weighed heaviest on the market Thursday. Boeing had its worst day since September 2016. The stock lost $10.85, or 3.1 percent, to $340.16. General Electric declined 58 cents, or 3.3 percent, to $16.77.
Alcoa tumbled 7 percent after the company reported a wider loss in the fourth quarter. Alcoa said it will freeze its pension and move some employees to a defined contribution retirement plan starting in 2021 as it looks to cut costs. The stock lost $3.99 to $53.
Several banks also reported quarterly results. Morgan Stanley rose after its latest earnings beat Wall Street's expectations. The stock added 49 cents to $55.84. Bank of NY Mellon and KeyCorp declined after their latest results disappointed traders. Bank of NY Mellon lost $2.54, or 4.4 percent, to $55.35, while KeyCorp dropped 44 cents, or 2.1 percent, to $20.82.
Technology stocks, one of the biggest gainers this year, continued to notch gains. Advanced Micro Devices picked up 29 cents, or 2.4 percent, to $12.47.
Traders welcomed news that Wyndham Worldwide agreed to buy La Quinta's hotel franchise and management business. Shares in La Quinta added 73 cents, or 3.8 percent, to $20.18. Wyndham gained $5.60, or 4.8 percent, to $122.73.
A decline in oil prices weighed on energy sector stocks. Baker Hughes slid $1.55, or 4.3 percent, to $34.74.
Benchmark crude slipped 2 cents to settle at $63.95 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 7 cents to close at $69.31 a barrel.
The dollar rose to 111.98 yen from 111.13 yen on Wednesday. The strengthened to $1.2242 from $1.2235.
The price of bitcoin recouped some of its recent losses. The digital currency gained 2.9 percent to $11,462, according to the tracking site CoinDesk. Bitcoin futures on the Cboe Futures Exchange rose 8.7 percent to settle at $11,765. The futures allow investors to make bets on the future price of bitcoin.
Gold dropped $12 to $1,327.20 an ounce. Silver slipped 21 cents to $16.95 an ounce. Copper rose 1 cent to $3.20 a pound.
In other energy futures trading, wholesale gasoline added 3 cents to $1.88 a gallon. Heating oil dropped a penny to $2.06 a gallon. Natural gas fell 4 cents, or 1.3 percent, to $3.19 per 1,000 cubic feet.
Major stock indexes in Europe finished mixed. Germany's DAX rose 0.7 percent, while France's CAC 40 was little changed. Britain's FTSE 100 fell 0.3 percent.
In Asia, Japan's benchmark Nikkei 225 finished 0.4 percent lower. Hong Kong's Hang Seng added 0.4 percent after China reported 6.9 percent economic growth in 2017, faster than expected. South Korea's Kospi inched up less than 0.1 percent.