By Akane Otani and Riva Gold 

U.S. stocks, the dollar and government bond yields fell Tuesday, as some investors grew nervous that reality would fall short of expectations once President-elect Donald Trump takes office later this week.

Investors betting on higher growth and inflation under Mr. Trump have generally sent the dollar and shares of financial companies higher and sold long-dated government debt and gold since the November election. But some of the steepest moves have stalled this year.

The dollar, which had surged to a 14-year high earlier this month, posted its largest daily decline since early June, and the yield on the 10-year U.S. Treasury note sank to its lowest level since Nov. 29. Financial companies, among the biggest winners in the stock market since Election Day, suffered their biggest daily drop since the Brexit selloff.

"We had this period of time where we rallied on potential policies, but now the market is looking for what actually comes in," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.

The WSJ Dollar Index, which tracks the currency against a basket of 16 others, tumbled 1.3% after Mr. Trump described the currency as "too strong" in an earlier interview with The Wall Street Journal. Mr. Trump also criticized a key part of House Republicans' corporate-tax plan.

Government bonds climbed, with the yield on the 10-year U.S. Treasury note falling to 2.327% from 2.380% on Friday, and down from a recent peak of 2.6% in mid-December. Yields fall as bond prices rise.

The blue-chip index fell for a third consecutive session, dropping 58.96 points, or 0.3%, to 19826.77. The S&P 500 declined 6.75 points, or 0.3%, to 2267.89 and the Nasdaq Composite lost 35.39 points, or 0.6%, to 5538.73.

The S&P 500 financials sector slid 2.3% -- its biggest decline since June 27. Higher long-term yields tend to improve profits at lenders, a prospect that helped lift financial shares in the S&P 500 by 18% from Election Day through Friday's close.

Morgan Stanley, which posted its best fourth-quarter results since the financial crisis on Tuesday, fell $1.66, or 3.8%, to $42.15.

Goldman Sachs Group declined 8.56, or 3.5%, to 235.74 and J.P. Morgan Chase lost 3.15, or 3.6%, to 83.55 -- together shaving about 80 points off the Dow industrials.

Shares of dividend-paying stocks, which tend to benefit when investors are seeking safety, rose in the S&P 500, with the utilities sector up 1.2% and the real-estate sector adding 0.8%.

Haven assets gained. Gold for January delivery rose 1.4% to $1,212.00 an ounce, its highest settlement since Nov. 17.

In Europe, stocks pared declines and the British pound charged back from a 31-year low after Prime Minister Theresa May gave more details about her plans to take the U.K. out of the European Union.

While Mrs. May said in her speech that the U.K. intends to leave the EU's single market, "the most negative aspects of her speech were already out there, and everything else was pretty levelheaded in tone," said Stephen Gallo, strategist at BMO Capital Markets.

The Stoxx Europe 600 fell 0.2% and the British pound rose 3% against the dollar to $1.2414.

A stronger yen weighed on stocks in Japan, sending the Nikkei Stock Average down 1.5% in its biggest drop this year. The Shanghai Composite rose 0.2%, ending a five-day losing streak, while the Hang Seng Index added 0.5%.

Write to Akane Otani at akane.otani@wsj.com and Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 17, 2017 17:47 ET (22:47 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.