By Sinead Carew
NEW YORK (Reuters) - U.S. stocks ended lower on Friday, with healthcare stocks leading the declines, as investors cashed in on a post-election rally and waited for clarity on the next administration's policies.
Wall Street equities took a breather after rising dramatically since Donald Trump's surprise victory in the presidential election last week.
While the three major indexes closed higher for the second week in a row, the rally lost some steam this week as investors awaited more information to support their bets that Trump could succeed in passing proposals to lift infrastructure spending and reduce taxes.
"I see the market kind of churning here because it's had a very decent move," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York. "Trump's policies continue to be just rhetoric because none of it has been enacted."
The Dow Jones industrial average <.DJI> fell 35.89 points, or 0.19 percent, to 18,867.93 while the S&P 500 <.SPX> dropped 5.22 points, or 0.24 percent, to 2,181.9.
The Nasdaq Composite <.IXIC> slipped 12.46 points, or 0.23 percent, to 5,321.51 after hitting a record of 5346.8.
The Nasdaq's biggest drags came from technology companies such as Alphabet Inc <GOOGL.O> and drug firms including Amgen <AMGN.O>.
Six of the 11 major S&P 500 sectors closed lower. Losses in shares of Allergan Plc <AGN.N> and Merck <MRK.N> were the biggest drags on the S&P health sector <.SPXHC>, which led the decliners. The health index pared its post-election lift but was still 1.8 percent higher than Nov. 8, even after Friday's drop of 1.2 percent. Only five of the indexes stocks ended higher.
Consumer staples <.SPLRCS> fell 0.4 percent, weighed down by a 1.3 percent fall in Procter & Gamble <PG.N>. The S&P Energy sector <.SPNY> was the second best performer with a 0.5 percent increase as producers added to rig count, suggesting that they might be expecting a demand boost, Polarci said.
Traders are pricing in an 83 percent chance for the Federal Reserve to raise interest rates in December, according to Thomson Reuters data.
The S&P financial sector <.SPSY> ended up 0.08 percent, and has risen 10.8 percent since the U.S. election, boosted by prospect of higher interest rates and lighter regulation.
St. Louis Fed President James Bullard said Friday he was leaning toward supporting a December increase and that the real question would be the Fed's rate path in 2017.
Kansas City Federal Reserve Bank President Esther George said that while she supports raising rates, the U.S. central bank must do so only gradually. The comments added to Fed Chair Janet Yellen's Thursday statement that the rate hike could come "relatively soon."
Gap <GPS.N> fell 16.6 percent and Abercrombie & Fitch <ANF.N> fell 13.8 percent. Both retailers warned of a challenging holiday quarter.
Declining issues outnumbered advancing ones on the NYSE by a 1.10-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers.
The S&P 500 posted 32 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 253 new highs and 30 new lows.
About 6.69 billion shares changed hands U.S. exchanges, well below the 8.02 billion average for the last 20 sessions.
(Reporting by Tanya Agrawal and Anya George Tharakan; Editing by Nick Zieminski and David Gregorio)