New York - Wall Street stocks retreated from records on Thursday as investors soured on financial shares following earnings from large banks.
The pullback in the US came on a mixed day for European equities as investors continued to weigh the murky politics surrounding the Catalan independence movement.
US stocks have been on a tear since President Donald Trump last month unveiled a much-anticipated tax cut plan.
But they fell back on Thursday despite better-than-expected earnings from JPMorgan Chase and Citigroup. Both companies fell after the reports, with Citigroup shedding 3.4%.
"Considering the overbought nature of the stock market, the market was vulnerable to a negative surprise, or to ... profit taking," said Karl Haeling of LBBW. "You do have to wonder, at what point are we going to get a correction?"
Europe's stock markets held mostly steady as tensions eased over Catalonia.
S&P warns on Catalonia
Madrid investors took profits a day after a relief rally to push the Ibex a touch lower in closing trade. Spanish shares had surged on Wednesday after Catalan leader Carles Puigdemont called for independence to be suspended to allow for talks with the Spanish government.
Still, ratings agency Standard and Poor's warned that the crisis over Catalan independence from Spain could push the region into recession.
"The tensions between Catalonia and the central government, if unchecked, could lead to a sustained drop in business confidence and potential business disruption," said S&P credit analyst Elena Iparraguirre.
The euro retreated against the dollar, but the pound moved higher against the greenback following a report in German newspaper Handelsblatt that Britain could be given a two-year extension to complete Brexit due to a deadlocking in negotiations between Britain and the European Union over terms of the divorce.
Oil prices fell after the International Energy Agency warned that more output restraint is needed from Opec producer countries if the market is to find a sustainable balance.
Among individual equities, HSBC dropped 1.6% after announcing that it had chosen John Flint, its head of retail banking and wealth management, to succeed Stuart Gulliver as chief executive, who is retiring.
German airline Lufthansa jumped 1.8% as it announced plans to buy more than half the planes of bankrupt Air Berlin.
Lufthansa has yet to say how much it will pay under the deal, but Lufthansa chief executive Carsten Spohr told newspaper Rheinische Post that the group would invest €1.5bn in its low-cost subsidiary Eurowings following the takeover.
AT&T sank 6.1% as it confirmed many of its full-year financial targets, but said it expects a hit of $210m in pre-tax earnings in the third quarter due to US hurricanes and earthquakes in Mexico.
AT&T also said it expects a drop of 90 000 in total US video subscribers as more consumers shun traditional cable packages in favour of streaming and other "over-the-top" services.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories