By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks wavered on Monday in the
next-to-last trading session of a torrid year that's seen Wall
Street set a string of record highs, though the pace of recent
gains has fueled worries that a pullback is overdue.
Volume was thin, with investors finding little fuel to push the
market either way, while highflying Twitter Inc. shares had their
wings clipped for a second straight day.
The S&P 500 index (SPX) declined 0.9 point to 1,840.50,
while the Dow Jones Industrial Average (DJI) gained 10.58 points,
or 0.1%, to 16,488.99.
The Nasdaq Composite index (RIXF) lost 7.75 points, or 0.2%, to
4,148.84.
The Dow is up nearly 26% year-to-date, leaving the index on
track for its biggest annual percentage gain since 1996, while the
S&P 500 is up around 29% over the same stretch, putting it on
track for its best annual gain since 1997.
Both indexes added to a string of record highs last week,
contributing to concern the market may be overdue for at least a
near-term pullback, analysts said, noting high levels of margin
debt and bullish sentiment.
While a pullback wouldn't be a shock, the market's recent
performance doesn't necessarily bode poorly for 2014, although the
magnitude of any rise isn't likely to match that seen this year,
said Bob Landry, executive director and portfolio manager at USAA
Investments in San Antonio.
Landry said he's cautiously optimistic the market will push
higher in 2014 as economic growth continues to improve, barring any
"policy mistakes" out of Washington, D.C., or some unforeseen
geopolitical disaster.
The first big test for the market will come in January as
fourth-quarter earnings season gets under way, he said.
Analysts surveyed by FactSet now expect earnings by S&P 500
companies to grow 6.3% in the fourth quarter, which is down from
initial expectations for growth of around 9.5%, Landry noted. If
companies can beat expectations, it would likely help keep the
market chugging along, he said.
The economic calendar remained light Monday.
The National Association of Realtors said its index of pending
home sales rose 0.2% in November to 101.7, slightly above a
10-month low of 101.5 in October, but down from 103.3 in November
2012. The data had little impact on stocks.
The yield on the 10-year Treasury note (10_YEAR) pushed back
above 3% last week, but slipped in recent action to around 2.98%.
Yields fall as bond prices decline. Rising rates can unsettle
stocks, though a gradual rise in rates driven by improving economic
growth could likely be taken in stride, analysts said.
Walt Disney Co. (DIS) rose 2.7%, while Coca-Cola Co. (KO) and
Cisco Systems Inc. (CSCO) each added 0.9%, making them top gainers
among blue chips, while Chevron Corp. (CVX), down 1%, was the
biggest decliner.
In other action, shares of Twitter Inc. (TWTR) fell more than
4%. Shares of the microblogging platform were in focus after
dropping more than 13% on Friday as analysts expressed doubts about
its highflying performance. Twitter made its debut in an IPO
earlier this year and remains up more than 50% for the month of
December.
Shares of Crocs Inc. (CROX) rose nearly 17% after Chief
Financial Officer Jeff Lasher said in an interview that Blackstone
Group LP (BX) will invest $200 million in the shoe company and that
Chief Executive John McCarvel will retire by late April.
Cooper Tire & Rubber Co. (CTB) trimmed early loses but
remained down more than 1% after it terminated a $2.2 billion
merger agreement with Indian suitor Apollo Tyres Ltd.
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