NEW YORK — U.S. stocks drifted lower in Monday trading, pulling the Standard & Poor’s 500 index back from its five-year high.  

The S&P 500 slipped two points to 1,516 shortly after 2:30 p.m. EST. Seven of the 10 industry groups within the S&P 500 dropped.

The broad-market index ended last week at its highest level since November 2007, climbing for six weeks in a row.

Now, with major indexes nearing record highs, many think the stock market’s rally is ready for a pause.

“The consensus seems to be that we’re due for a correction,” says Brian Gendreau, market strategist at Cetera Financial Group. “If you compound the increase we’ve had so far, this year would be the best year ever for stocks. And nobody thinks that that’s going to happen.”

But solid earnings reports helped feed a rally in recent weeks. Of the 342 companies in the S&P index that reported results through last week, two out of every three have beat Wall Street’s earnings estimates, according to research from Goldman Sachs.  

Gendreau pointed to three reasons he believes that stocks still have room to run. Even after the market’s recent surge, the typical stock looks fairly priced when compared to underlying earnings. Corporations keep finding ways to boost profits, which helps lure stock prices higher. And Americans looking for places to put their savings have few attractive alternatives.

“I’ll go out on a limb and say that I think earnings growth, attractive valuations and pent-up demand will add up to a fairly strong year for equities,” Gendreau said.   

No economic reports are scheduled to be released Monday. And few big companies are scheduled to report earnings.

In other trading, the Dow Jones industrial average dropped 27 points to 13,965. Home Depot led the Dow lower, falling 68 cents to $66.33. The Nasdaq composite fell five points to 3,188.

Loews Corp. said Monday morning that it lost $32 million in its fourth quarter, hurt by insurance losses from Superstorm Sandy and sliding prices for natural gas. The holding company, which has dealings in insurance, oil and gas and hotels, is largely controlled by the Tisch family of New York. Its stock sank 41 cents to $43.44.

The stock market raced to a stunning start this year. A last-minute deal in Washington to avoid tax hikes and spending cuts known as the “fiscal cliff” eased fears that the budget cuts could lead the U.S. into a recession. Markets soared in relief.

The Dow and the S&P 500 are up more than 6 percent for the year. The Nasdaq is up more than 5 percent.

In the market for U.S. government bonds, the yield on the 10-year Treasury traded at 1.95 percent on Monday, unchanged from late Friday. The yield began the year trading at 1.70 and has moved steadily higher as worries about a recession have dissipated, drawing traders out of the Treasury market, the world’s biggest hiding spot.

Among other companies in the news Monday:

— Apple’s stock gained following reports over the weekend that the tech giant is developing a wristwatch-like gadget, a smart watch. The device would reportedly run the same operating system used for iPhones and iPads. Apple rose $8.55 to $483.63.

— Danish drug maker Novo Nordisk dropped 14 percent. The U.S. Food and Drug Administration refused to approve the company’s proposed diabetes treatments until it received more data, which the drug maker said it couldn’t supply this year. Novo Nordisk’s depositary receipts lost $27.57 to $164.72.

— Carnival Corp., the cruise-ship operator, sank 30 cents to $38.71. An engine room fire over the weekend left its cruise ship Triumph stranded in the Gulf of Mexico. The company said Monday that the ship’s automatic extinguishing systems put out the fire and that nobody was injured.