Stock market rally pauses on Monday

NEW YORK — A record-breaking rally in stocks paused Monday as investors assessed whether stock valuations were overstating the recent improvement in the economy.

The latest positive data, out Monday, showed that Americans increased spending at retailers last month. That suggests consumers may boost economic growth in the current quarter ending June 30. Still, that wasn’t enough to lift shares.

“What we have seen is a huge rally, and there aren’t any stones unturned at this point,” said Alec Young, global equity strategist at S&P Capital IQ. “You reach a point where investors aren’t willing to bid things up any more.”

Stocks have surged this year, boosted by an improving economy, Federal Reserve stimulus and record corporate earnings. Signs the housing market is reviving are also supporting stocks. The Dow Jones industrial average and the Standard and Poor’s 500 index both closed at record highs Friday.

Oil fell 87 cents, or 0.9 percent, to $95.17 a barrel. Gold dropped $2.30, or 0.2 percent, to $1,434.30 an ounce. The U.S. dollar was little changed against the Japanese yen at 101.83 and gained against the euro.

Retail sales increased 0.1 percent in April from March, the Commerce Department said Monday. That’s an improvement from the 0.5 percent decline in March, which was the largest drop in nine months. Economists had forecast that sales declined by 0.3 percent.

Consumer sentiment is improving as the housing market recovers, which is giving people the confidence to spend more, said Doug Cote, chief market strategist at ING Investment Management.

“If housing continues its upward trajectory, the animal spirits of the consumer will continue to be bolstered,” said Cote.

The Dow fell 26.81 points, or 0.2 percent, to 15,091.68. The S&P 500 index was little changed at 1,633.77. The Dow is up 15.1 percent this year, and the S&P 500 is 14.6 percent higher.

The Nasdaq composite rose 2.21 points, 0.1 percent, to 3,438.79.