US stocks fell in light trading on Monday as investors dumped former darlings of the market, real estate companies and utilities.
Indexes slumped from the start of trading and remained down throughout the day as investors continue to speculate about when the Federal Reserve is likely to raise interest rates as the economy strengthens. A report earlier in the day showed US manufacturing picking up.
The selling was modest, but broad. Eight of the 11 sectors of the Standard and Poor's 500 index closed down for the day.
The Dow Jones industrial average fell 54.30 points, or 0.3%, to 18,253.85. The S&P 500 index lost 7.07 points, or 0.3%, to 2,161.20. The Nasdaq composite declined 11.13 points, or 0.2%, to 5,300.87.
Investors hungry for income-producing assets have been buying utilities and real estate companies for their steady dividends. But those stocks become less attractive if interest rates and bond yields climb.
On Monday, stocks of real estate companies lost 1.8%. Utilities shed 1.4%.
In an election year when both candidates for US president are talking tough about trade, renewed fears over Britain's exit from the EU may have also added to the jitters, said Rob Haworth, senior investment strategist at US Bank Wealth Management.
Bucking the downward trend in the market were some stocks involved in the latest of a string of deal-making.
Janus Capital surged 1.69 dollars, or 12%, to 15.70 dollars after announcing it would merge with a London-based investment company, Henderson Group.
Outdoor gear retailer Cabela's shot up 8.25 dollars, or 15%, to 63.18 dollars on news it is being bought by Bass Pro Shops for 4.5 billion dollars.
Ernie Cecilia, chief investment officer at Bryn Mawr Trust, said companies are making deals because they have few other ways of lifting sales in a slow growth, low inflation world.
"If you can't raise prices," Cecilia said, "how else are you going to grow?"
The price of oil continued its climb from last week, which normally would help drillers and other energy companies. Benchmark U.S. crude oil rose 57 cents to close at 48.81 dollars a barrel.
In the end, though, even energy companies fell, losing 0.2%.
Among stocks making big moves, Merrimack Pharmaceuticals slumped 31 cents, or 5%, to 6.04 dollars. The cancer drug developer announced that it would cut almost a quarter of its workforce and look for a new chief executive.
Federal Realty Investment trust lost 5.85 dollars, or nearly 4%, to 148.08 dollars, one of the biggest declines in the S&P 500.
A number of economic reports are due out this week, culminating on Friday with the government's monthly jobs survey. Strong jobs numbers might encourage Federal Reserve to raise interest rates this year.
In energy trading, Brent crude, the international standard, rose 70 cents to close at 50.89 dollars a barrel in London. Wholesale gasoline edged up one cent to 1.47 dollars a gallon, heating oil rose one cent to 1.55 dollars a gallon and natural gas increased two cents to 2.923 dollars per 1,000 cubic feet.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.62% from 1.60%. The euro fell to 1.1217 dollars from 1.1237 dollars and the dollar rose to 101.55 yen from 101.41 yen.
Precious and industrial metals prices closed lower. Gold fell 4.40 dollars to 1,312.70 dollars an ounce, silver lost 35 cents to 18.87 dollars an ounce and copper slipped two cents to 2.19 dollars a pound.