* Energy shares surge on oil rally
* Drugmakers Bristol-Myers, Allergan, Merck drop
* Indexes down: Dow 0.2 pct, S&P 0.21 pct, Nasdaq 0.34 pct (Updates to afternoon)
By Noel Randewich
Aug 8 (Reuters) - Wall Street retreated from record highs on Monday as a drop in healthcare stocks offset the impact of higher oil prices on energy stocks and a strong jobs report.
A rally to several all-time highs since late June has left the S&P 500 up nearly 7 percent in 2016, with many investors concerned about stretched valuations.
"This is a natural pause for reflection by the markets. Everyone is sitting there saying 'Holy cow, what did we do?'," said Brad McMillan, chief investment officer at Commonwealth Financial Network.
"Momentum is a big part of it. People are afraid of missing out."
Pressured by losses in Bristol-Myers, Merck and Allergan, the S&P 500 healthcare index dipped 1 percent while the Nasdaq biotech index dropped 1.2 percent.
Oil prices rose more than 2 percent after a report last week indicated that some OPEC members had called for a freeze in production.
Investors fretted about growing signs that S&P 500 aggregate earnings could decline for a sixth straight quarter.
Analysts polled by Reuters expect third-quarter earnings to fall 0.2 percent, as of Monday. They had estimated a 0.2 percent rise on Aug. 3.
At 2:32 pm EDT (1832 GMT), the Dow Jones industrial average was down 0.2 percent to 18,506.48 points and the S&P 500 dipped 0.21 percent to 2,178.31.
The Nasdaq Composite dropped 0.34 percent to 5,203.43.
Seven of the 10 major S&P 500 indexes fell, with the healthcare group losing the most. The energy index gained 1.45 percent, with Exxon Mobil up 1.1 percent.
Bristol-Myers fell for the second straight day, shedding 4.6 percent after it said on Friday its lung-cancer drug failed a key late-stage study.
Merck, which makes a rival drug, fell 1.8 percent. The stock had rallied 10 percent on Friday.
Allergan lost 2.8 percent after it slashed its full-year revenue forecast and said it was not looking to use its surplus cash to fund any deals.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.35-to-1 ratio. On Nasdaq, a 1.18-to-1 ratio favored decliners.
The S&P 500 posted 29 new 52-week highs and no new lows. The Nasdaq Composite recorded 90 new highs and 13 new lows. (Reporting by Noel Randewich in New York; Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Jeffrey Benkoe)