By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks headed for a flat finish
Monday, hovering near-unchanged in the next-to-last trading session
of a torrid year that's left major indexes on track for their
biggest annual percentage gains since the 1990s, 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 formerly highflying Twitter Inc. shares
had their wings clipped for a second-straight day.
The S&P 500 index (SPX) declined 1.2 points, or 0.1%, to
1,835.30, while the Dow Jones Industrial Average (DJI) rose 5
points, or less than 0.1%, to 16,426.
The Nasdaq Composite index (RIXF) shed 1.05 points, edging down
to 4,155.55.
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 2.97%.
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 2.3%, while Cisco Systems Inc. (CSCO)
added 1%, making them top gainers among blue chips. Oil producers
Exxon Mobil Corp. (XOM) , down 0.9%, and Chevron Corp. (CVX)(CVX),
off 0.7%, were among the biggest decliners.
In other action,Twitter (TWTR) fell 3.5%. 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 by around 48% for the month of December.
Shares of social network Facebook Inc. (FB) were also under
pressure, shedding 2.6%, but reamin on track for 102.7% annual
rise. Career-oriented social network LinkedIn Corp. (LNKD) fell
0.7%.
Shares of Crocs Inc. (CROX) soared nearly 22% 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) rose more than 5%. Shares had
initially tumbled after it terminated a $2.2 billion merger
agreement with Indian suitor Apollo Tyres Ltd.
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