Stocks lost ground Monday on Wall Street after a disappointing report on factory orders.
The early downturn came after the Dow Jones industrial average rose above 14,000 points last week and the benchmark Standard Poor’s 500-stock index moved within 60 points of its all-time intraday high of 1,576.09.
In afternoon trading on Monday, the S.P. 500 fell 1 percent, the Dow was off 0.95 percent and the Nasdaq composite was down 1.2 percent.
“We are coming off an economic data hangover from Friday and the market was on a bullish spree,” said Andre Bakhos, director of market analytics at Lek Securities in New York. “This is an opportunity for investors to take advantage of the bull run.”
The Dow’s march above 14,000 was the highest since October 2007. The S.P. 500 is up more than 6 percent for the year, with nearly half of the gains coming in the session after Congress successfully sidestepped the so-called “fiscal cliff” of tax increases and spending cuts that threatened to derail the economic recovery.
“With an early year run of better than 6 percent, investors are already behind in performance and pullbacks should be shallow and well contained, giving the underweighted investors the opportunity to move into equities,” Mr. Bakhos said.
The Commerce Department reported Monday morning that overall factory orders rose 1.8 percent in December, compared with a median forecast of 2.2 percent by analysts polled by Reuters. But the data included a revised estimate for capital goods orders outside of the defense and aircraft industries, showing they edged 0.3 percent lower. The decline was a possible sign that companies were losing confidence in the economy’s strength because of fears over tighter fiscal policy.
Economic data has pointed to a modest United States recovery, but the data has not been strong enough to upset investor expectations that the Federal Reserve will continue its stimulus policy that has buoyed stocks.
Earnings are due from a number of companies Monday, including Yum! Brands, the owner of fast-food chains.
Chevron shares dipped 1.1 percent to $115.23 after UBS cut its rating to neutral, while Wal-Mart shed 1.7 percent to $69.26 after JP Morgan lowered its rating on the retailer.
Oracle shares lost 3 percent to $35.09 after the company agreed to buy the network gear maker Acme Packet for about $1.9 billion. Acme Packet shares surged 22.2 percent to $29.24.
According to Thomson Reuters data, of the 239 companies in the S.P. 500 that have reported earnings through Friday, 68 percent have reported earnings above analyst expectations, compared with the 62 percent average since 1994 and the 65 percent average over the past four quarters.
S.P. 500 fourth-quarter earnings are expected to rise 3.8 percent, according to the data. That estimate is above the 1.9 percent forecast at the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast on Oct. 1.
European shares closed sharply lower as a near-term risk of a technical sell-off and political uncertainty in the euro zone prompted a bout of profit-taking. The FTSE 100 in London closed was off 1.58 percent, the DAX in Frankfurt was down 2.49 percent, and the CAC 40 in Paris declined 3 percent.
Asian shares climbed to 18-month highs after United States data showed some promise of a credible recovery, while momentum also gained on firmer manufacturing data from Europe and China.
Japan Airlines said it would talk to Boeing about compensation for the grounding of the 787 Dreamliner, adding that the idling of its jets would cost it nearly $8 million from its earnings through the end of March.
Article source: http://www.nytimes.com/2013/02/05/business/daily-stock-market-activity.html?partner=rss&emc=rss