Tokyo stocks dipped 0.34 percent Wednesday morning on profit-taking after surging the previous day.
The benchmark Nikkei 225 index, which climbed 1.95 percent Tuesday, fell 49.72 points to 14,375.72 by the break, while the Topix index of all first-section shares was flat, inching up 0.24 points to 1,178.59.
A slightly stronger yen also took some air out of the market, denting exporter shares, as Sony and Japan's biggest banks get set to report fiscal full-year earnings later in the day.
The dollar slipped to 102.17 yen, from 102.26 yen in New York.
On Tuesday in New York, the Dow and S&P 500 extended Monday's gains despite weaker-than-expected US retail sales data.
The Dow added 0.12 percent and the S&P 500 edged up 0.04 percent, both at new records, but the Nasdaq dipped 0.33 percent after surging 1.77 percent Monday.
Sony eased 0.11 percent to 1,784 yen a day after it said it would not pay bonuses to senior executives for the third straight year as it braces for another disastrous earnings report.
The firm said this month it expects to book a 130 billion yen net loss in the past fiscal year to March, while it slashed its operating earnings outlook.
Mitsubishi UFJ shares were down 1.73 percent to 568 yen as Japan's largest bank publishes what are expected to be buoyant earnings later in the day.
Bucking the downtrend, book publisher Kadokawa Corp. surged 10.79 percent to 3,490 yen.
The jump followed a report in the Nikkei business daily that said Kadokawa and Internet company Dwango were planning to merge in a bid to combine Kadokawa's popular content -- including print publications, movies and games -- with Dwango's online distribution network.