NEW YORK (Reuters) - U.S. stocks edged lower in early trading on Tuesday, receding from record levels as traders found few reasons to buy following a string of gains.
The day's losses were broad but largely slight. Nine of the ten primary S&P 500 sectors were down on the day, led by telecom, which lost 0.7 percent. Slightly more than 60 percent of stocks traded on both the New York Stock Exchange and the Nasdaq fell on the day.
The Dow and S&P 500 had closed at records on Monday; that was the benchmark S&P's third consecutive record. However, recent advances have come in light trading, indicating the rally has lacked conviction.
"Valuations are elevated, and therefore anything that looks soft gives the market pause," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "Recent data has collectively suggested things are decent, which is fertile for stocks, though more in the long-term than right now."
The Dow Jones industrial average fell 29.92 points or 0.18 percent, to 16,713.71, the S&P 500 lost 2.37 points or 0.12 percent, to 1,922.6 and the Nasdaq Composite dropped 1.81 points or 0.04 percent, to 4,235.39.
The CBOE Volatility Index rose for a second straight day, up 2.9 percent, though it remains under 12, well below historical levels. While the current level of the VIX indicates a lack of fear in the market, some investors are concerned it also reflects a sense of complacency among investors.
Semiconductor stocks were among the market's leaders, with the PHLX semiconductor index up 0.5 percent. The group was lifted after Skyworks Solutions Inc raised its earnings and revenue outlook, sending shares up 5 percent to $45.23. Broadcom Corp also gave a boost to chipmakers, up 2 percent to $35.52.
AT&T Inc raised its full-year revenue outlook to 5 percent growth from 4 percent, but shares of the Dow component were essentially flat at $35.42.
Hillshire Brands rose 9 percent to $58.37 after Pilgrim's Pride Corp increased its offer to buy the company and topped an offer from Tyson Foods Inc. Hillshire said it would conduct talks with both parties.
Shares of Pilgrim's fell 0.5 percent to $25.80 while Tyson was down 0.8 percent.
Element Financial Corp late Monday agreed to buy PHH Corp's auto fleet leasing business for about $1.4 billion in cash. Shares of PHH fell 6.6 percent to $23.58.
In the latest economic data, April factory orders rose 0.7 percent, over the expectation for growth of 0.5 percent.
Editing by Bernadette Baum and Nick Zieminski