US stocks snap record-setting rally

New York - US stocks snapped on Monday a three-day rally to record highs as investors awaited Apple earnings results and a Federal Reserve policy meeting.

The Dow Jones Industrial Average dropped 42.17 points to 18 037.97.

The Standard & Poor's 500-stock index retreated 8.77 points to 2 108.92, while the tech-rich Nasdaq Composite Index fell 31.84 points to 5 060.25.

Both the S&P and Nasdaq had built on record closes on Friday as markets opened higher, but Wall Street was unable to maintain the momentum.

Apple bounced up 1.8% ahead of its first earnings report as a member of the blue-chip Dow. The tech giant is to report fiscal second-quarter earnings after the markets close.

Apple has beaten profit estimates for the past eight quarters, noted John Plassard of Mirabaud Securities.

Investors also awaited the outcome of a two-day meeting of the Federal Open Market Committee, the Fed's policy arm, on Wednesday for signs of the timing of an interest rate increase, expected this year.

Biotech shares slid after Mylan rejected Teva Pharmaceutical's $40.1bn hostile takeover bid, saying the Israeli firm undervalued the company and the proposed combination "carries significant antitrust risk".

Mylan sank 5.7% and Teva dropped 4.3%. Amgen lost 3.4%, Biogen loset 3.1% and Gilead Sciences slipped 0.7%.

Applied Materials dived 8.4% after it agreed with Tokyo Electric to abandon their nearly $10bn merger agreement, citing opposition from the US Justice Department on antitrust grounds.

The announcement came after Comcast and Time Warner Cable said on Friday they had scrapped their $45bn merger plans, also due to US anti-trust concerns.

Time Warner Cable gained 0.7% on speculation that it may be in the sights of Charter Communications; Charter slid 1.5%.

Igate added 3.3% at $47.36 after French IT company Capgemini said it was buying the US rival for $4bn in a cash-and-stock deal that offered $48 per share, a 5% premium to Igate stock's close on Friday.

Tesla Motors jumped 6.0%. The electric-car maker is expected to make an announcement about storage batteries on Thursday.

Bond prices were mixed. The yield on the 10-year US Treasury rose to 1.93% from 1.92% on Friday, while the 30-year rose fell to 2.61% from 2.62%. Bond prices and yields move inversely.