By Paul Vigna and Anna Isaac 

The Dow Jones Industrial Average and S&P 500 pulled back from record levels Tuesday, sidetracked by weakness in shares of Home Depot and other retailers.

The blue-chip index lost 102.20 points, or 0.4%, to 27934.02. The S&P 500 slipped 1.85 points, or 0.1%, to 3120.18. The Nasdaq Composite rose 20.72 points, or 0.2%, to a record of 8570.66.

A drop here isn't really a surprise, said Nick Reece, senior analyst at Merk Investments. "We've seen sentiment get pretty optimistic," he said. "It's probably a little overstretched."

Shares of retailers were among the biggest decliners in Tuesday's session as the sector's third-quarter reporting season ramped up. Dow component Home Depot dropped $12.99, or 5.4%, to $225.86 after cutting its earnings outlook following a disappointing third quarter.

Shares of Kohl's dropped $11.38, or 19%, to $47.02 -- their biggest single-day drop since going public in 1992 -- after the department-store operator lowered its profit guidance for the year.

Home Depot was the worst performer in the Dow, both in dollar and percentage terms. Kohl's was the worst performer in the S&P 500 by percentage loss.

The disappointing outlook from both companies weighed on the stocks of other U.S. retailers, too, as investors grew concerned about the health of the sector. Macy's, which is scheduled to report earnings later in the week, fell $1.84, or 11% to $15.04, while Nordstrom declined $2.37, or 6.3%, to $35.50. Gap slumped 52 cents, or 3% to $16.78.

Meanwhile, discount retailer TJX rose $1.09, or 1.8%, to $60.64 after its report showed a strong rise in sales.

Traders also had an eye on Washington, but not necessarily for the main event.

Even though the top focus in the capital was the continuing impeachment hearings, traders said they were also concerned about a bill in the Senate in support of Hong Kong protesters, and how it might affect the continuing negotiations over a U.S.-China trade deal. The bill, if passed, would allow for sanctions against anyone found violating Hong Kong's autonomy.

"Some feel traders are concerned that a Senate vote on Hong Kong could blow up chance of trade deal," said Art Cashin, who runs UBS's floor operations at the NYSE.

Globally, stocks edged higher as investors grew less apprehensive about the economic outlook. Hong Kong's Hang Seng Index ended the day up almost 1.6%, while the Shanghai Composite gauge advanced 0.9%.

Meanwhile, the pan-continental Stoxx Europe 600 index fell 0.1%.

"Markets were thinking a recession was imminent at the end of August, now people are discovering that it is less bad than that," said Florian Ielpo, head of macroeconomic research at asset-management firm Unigestion. "Pessimism is starting to fade."

The ICE dollar index, which tracks the greenback against a basket of currencies, dropped sharply immediately after President Trump said he met with Federal Reserve Chairman Jerome Powell at the White House Monday and "protested" about U.S. interest rates being too high. The gauge later erased those losses.

Mr. Trump, who has been vocal in his criticism of the central bank, tweeted that he discussed the state of the economy, trade issues, and the impact of a "too strong" dollar with the central bank chief. The Fed said Mr. Powell reiterated that he hoped interest-rate cuts earlier this year would bolster the economy.

The yield on the U.S. 10-year Treasurys slipped to 1.785% from 1.808% on Monday. In commodities, U.S. crude futures fell 3.2% to $55.21 a barrel on concerns about excess oil supplies.

Write to Paul Vigna at paul.vigna@wsj.com and Anna Isaac at anna.isaac@wsj.com

(END) Dow Jones Newswires

November 19, 2019 16:47 ET (21:47 GMT)

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