Oil drop stymies Dow's march to 20,000; Nasdaq boosted by health stocks

By Sinead Carew

(Reuters) - Declines in energy and financial stocks weighed on the S&P 500 on Monday and stalled the Dow's pursuit of the 20,000 milestone ahead of earnings season, while the Nasdaq hit a record intraday high.

The S&P's energy sector <.SPNY> dropped 1.4 percent as oil prices slid on concerns that rising Iraqi exports and U.S. output could dampen the impact of a deal among major producers to limit output. [O/R]

Investors were taking a breather ahead of the fourth-quarter earnings season and the next U.S. President's administration. The S&P 500 benchmark has risen more than 6 percent since the Nov. 8 election of Donald Trump who has promised tax cuts, lighter regulation and fiscal stimulus.

"We're waiting for the roll-out of earnings and the initial forays of the Trump administration," Stephen Massocca, chief investment officer, Wedbush Equity Management LLC in San Francisco. "I don't see significant moves in the market until those events unwind."

The financial sector <.SPSY> was down 0.6 percent on Monday. Big banks will provide the first peek into how U.S. companies fared in the fourth quarter later this week. S&P 500 companies overall are expected to post a 5.8 percent increase in profit in the quarter, according to Thomson Reuters I/B/E/S.

Two-thirds of the 30 Dow components were lower, keeping the psychologically significant 20,000 mark at bay. International Business Machine's 0.9 percent drop was the Dow's biggest drag. Exxon Mobil's 1.7 percent decline and a 1.2 percent drop in Chevron were also big weights.

The Dow came tantalisingly close to the milestone on Friday, hitting a peak of 19,999.63, as the S&P 500 and the Nasdaq also touched records after a late pop in tech stocks.

"Our view about the Dow (hitting) 20,000 is not a matter of if, but a matter of when," said Matt Jones, U.S. head of equity strategy at J.P. Morgan Private Bank in New York.

At 2:53 p.m. ET, the Dow Jones Industrial Average was down 59.09 points, or 0.3 percent, to 19,904.71, the S&P 500 had lost 6.5 points, or 0.285466 percent, to 2,270.48 and the Nasdaq Composite had added 10.94 points, or 0.2 percent, to 5,531.99.

Eight of the 11 major S&P 500 sectors were lower.

The S&P's health sector <.SPXHC> was the biggest gainer helped by a string of multi-billion dollar deals.

Nasdaq was boosted most by healthcare stocks, led by Incyte's 19.9 percent jump after it announced advancements in its cancer drug program. [L1N1EZ0PH]

The consumer staples sector was down 0.6 percent with P&G and Coca-Cola among the biggest drags after Goldman Sachs downgraded the stocks to "sell."

Pet hospital operator VCA jumped 28 percent after agreeing to a $7.7 billion buyout offer from candy and pet foods maker Mars Inc. Ariad Pharma surged nearly 73 percent on a $5.20 billion buyout deal with Japan's Takeda .

Surgical Care Affiliates jumped 16 percent on a deal to be bought by UnitedHealth for about $2.30 billion. Dow component UnitedHealth dipped 0.3 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.37-to-1 ratio favoured decliners.

The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq Composite recorded 53 new highs and 15 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza and Meredith Mazzilli)