Stocks close lower as all 3 major indexes pull back from record highs

U.S. stocks cooled off Tuesday as all three major indexes pulled back from record highs and closed lower.

The drop came despite encouraging signs for the housing sector and as inflation continues to remain low.

The Dow Jones industrial average fell 84.03 points, or 0.5%, to close at 18,522.02. The Standard & Poor's 500 index slumped 12.00 points, or 0.6%, to 2178.15 and the Nasdaq composite index declined 34.90, or 0.7%, to 5227.11.

All three indexes had closed at record highs Monday as traders have been piling into U.S. stocks, which now make up the highest percentage of investors' portfolios since January 2015, according to Bank of America Merrill Lynch.

Investors took a pause from their recent streak of ebullience as they await for Wednesday's release of the minutes from the latest Federal Reserve meeting that will offer clues on the trajectory of U.S. interest rates.

In economic developments Tuesday, U.S. housing starts rose 2.1% from June to July, according to the U.S. Bureau of Economic Analysis. Housing starts were up 5.6% from a year earlier. Consumer prices were unchanged in July as energy costs fell sharply.

And Home Depot (HD), a key component of the Dow, met earnings expectations and raised its profit forecast. Shares closed lower though, dropping 0.6% to $136.23.

Oil prices continued their recent climb after a brief dip below $40. The price of West Texas Intermediate, the U.S. benchmark crude oil, rose 1.9% to $46.58

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.