* Financial stocks lead S&P losers
* Snapchat owner Snap Inc surges in debut
* Caterpillar drops after HQ searched by law enforcement
* Indexes down: Dow 0.5 pct, S&P 0.6 pct, Nasdaq 0.7 pct
(Updates to close)
By Caroline Valetkevitch
NEW YORK, March 2 U.S. stocks retreated on
Thursday, led by financial stocks, while Caterpillar shares
dropped following news that federal officials searched its
Caterpillar, down 4.3 percent at $94.36, was the
biggest drag on the Dow and among the biggest negatives for the
S&P 500. It was not immediately clear why federal agents raided
the three locations. After the bell the company
said the search was focused on the collection of documents and
Financials led the decline among sectors in the S&P 500,
which had its biggest daily percentage decline since Jan. 30.
The S&P financial index fell 1.5 percent in its biggest
daily drop since mid-January.
Bank stocks had surged on Wednesday on increased
expectations that the Federal Reserve will hike interest rates
this month. The S&P 500 and the Nasdaq had their best day since
the November election after U.S. President Donald Trump's
measured tone in his first speech to Congress lifted optimism.
"It was an awfully strong rally yesterday without
necessarily a lot of real news to justify it, so I think you're
just getting some profit taking today," said Rick Meckler,
president of investment firm LibertyView Capital Management in
Jersey City, New Jersey.
He said investors also appeared to be rotating into sectors
that have not done as well in the post-election rally, including
S&P utilities, up 0.7 percent.
Meckler said that since the election, though, any selling
has soon been met by greater buying. "It's going to take a more
material selloff to break people's view that they don't have
much to lose by buying stocks."
The trading debut of Snap Inc, the parent company
of messaging app Snapchat, grabbed investor attention, with the
shares closing up 44 percent at $24.48 and volume totaling more
than 216 million shares. The shares opened at $24 after pricing
The Dow Jones Industrial Average fell 112.58 points,
or 0.53 percent, to end at 21,002.97, the S&P 500 lost
14.04 points, or 0.59 percent, to 2,381.92 and the Nasdaq
Composite dropped 42.81 points, or 0.73 percent, to
The S&P 500 is up 11.3 percent since the Nov. 8 election.
Several Fed officials this week have stoked expectations of
an interest rate hike this month as the economy strengthens.
Fed Chair Janet Yellen is set to speak on Friday and could
provide the strongest indication about a move in coming weeks.
The Fed's next policy-setting meeting is set for March 14-15.
Traders have priced in about a 74-percent chance of a rate
hike this month, up from roughly 30 percent at the start of the
week, according to Thomson Reuters data.
Kroger fell 4.3 percent after reporting a surprise
decline in fourth-quarter same-store sales as competition
intensified in the U.S. grocery industry.
Declining issues outnumbered advancing ones on the NYSE by a
2.85-to-1 ratio; on Nasdaq, a 2.23-to-1 ratio favored decliners.
The S&P 500 posted 40 new 52-week highs and three new lows;
the Nasdaq Composite recorded 126 new highs and 39 new lows.
About 7.4 billion shares changed hands on U.S. exchanges,
compared with the 6.9 billion daily average for the past 20
trading days, according to Thomson Reuters data.
(Additional reporting by Yashaswini Swamynathan in Bengaluru;
Editing by Nick Zieminski and James Dalgleish)