Wall Street Pulls Back from Record Highs as Caterpillar Drops Over 5%

U.S. stock indices pulled back from record levels set in the previous session, as the Dow Jones Industrial Average dropped 543.29 points, or about 1.06%, to 50,977.99 points as of 11:26 a.m. New York time.

The S&P 500 index fell 44.22 points, or 0.57%, to 7,774.71 points, and the Nasdaq Composite index lost 184.30 points, or 0.67%, to reach 27,415.58 points. Eight out of eleven sectors in the S&P 500 declined, led by materials and industrials, while the housing stock index fell 3.1% to its lowest level in 17 months.

Caterpillar stock was the biggest loser, dropping more than 5% after Zacks Research downgraded its recommendation to "Hold" from "Strong Buy", while Chevron stock fell more than 1%. Peter Cardillo of Spartan Capital attributed part of the decline to profit-taking following the record peaks.

The average 30-year mortgage rate rose 19 basis points to 7.49%, increasing borrowing burdens on American households. The FedWatch tool showed the market pricing in a 19.4% probability of a 25-basis-point rate hike at the October 28 meeting, compared to 69% for the December option.

What Do These Terms Mean?

Dow Jones: An index comprising 30 major U.S. companies, used as a general gauge for the performance of the U.S. market.

S&P 500: An index comprising 500 large U.S. companies, considered the broader benchmark for U.S. stock market performance.

Basis Points: A small unit of measurement for interest rates or yields; 100 basis points equal 1%.

FedWatch: A tool that tracks futures prices and estimates market probabilities for interest rate decisions at each meeting.