The S&P 500 and the Nasdaq ended lower on Monday while the Dow failed to close above its milestone level of 16,000 as stocks sold off late in the session following Carl Icahn's cautious comments on the equities market.
The Dow and the S&P 500 retreated from record levels with less than an hour to go in Monday's session. The Nasdaq, which had been down slightly for most of the day, fell 1.1 percent to a session low.
Speaking at the Reuters Global Investment Outlook Summit, Icahn said he is "very cautious" on the stock market, saying he could see a "big drop" because earnings at many companies are fueled more by low borrowing costs rather than the strength of management.
He also hinted at his plan for Apple Inc (AAPL.O), the most valuable U.S. stock by market value, saying he does not want to fight with the management of the iPhone maker. He also said he has no plans to walk away from his investment. The stock extended losses following his comments, ending down 1.2 percent at $518.63 on Monday.
The Nasdaq was hammered by a sell-off in social media and cloud-related stocks, including Facebook (FB.O), down 6.5 percent at $45.83.
Tesla (TSLA.O) also extended losses, down more than 10 percent at $121.58. The electric car maker's stock has lost nearly 24 percent for the month so far.
"People are selling Nasdaq stocks. Tesla has become the poster child for momentum, high-valuation names. It's been under pressure since the earnings report. Its (weakness) has spilled over into other names," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The Dow Jones industrial average .DJI rose 14.32 points, or 0.09 percent, to end at 15,976.02. The Standard & Poor's 500 Index .SPX slipped 6.65 points, or 0.37 percent, to finish at 1,791.53. The Nasdaq Composite Index .IXIC slid 36.90 points, or 0.93 percent, to end at 3,949.07.
The S&P 500 had earlier hit 1,802.33 and the Dow touched 16,030.28, their highest levels ever. On Friday, both closed at record highs to mark their sixth straight week of gains.
Shares of another social media giant, Twitter Inc (TWTR.N), dropped 6.5 percent to $41.14 after a downgrade by Wunderlich Securities.
But Boeing Co (BA.N) shares rose 1.7 percent to $138.36 after the U.S. planemaker, at the Dubai Airshow on Sunday, announced commitments for a total of 259 of its new 777 jets. Worth about $100 billion at list prices, it is the largest combined order in Boeing's history. The stock rose as high as $142.00 earlier.
A number of U.S. Federal Reserve speakers offered more insights into the central bank's stimulus. The latest was Charles Plosser, president of the Philadelphia Fed, who said improved economic and labor market conditions suggest the Fed should set a fixed dollar amount on its current bond-buying program and end the program when that amount is reached.
William Dudley, the president of the Federal Reserve Bank of New York, said on Monday that he was becoming "more hopeful" about the U.S. economy.
But with intervention from the Fed likely to keep interest rates near zero for the foreseeable future, equities are expected to continue to attract yield-seeking investors, even after the Fed begins to scale back its asset purchases.
About 5.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, slightly below the five-day average closing volume of about 5.8 billion, according to BATS exchange data.
On the New York Stock Exchange, decliners beat advancers by a ratio of nearly 3 to 2. On the Nasdaq, 16 stocks fell for every nine that rose.