By Dan Strumpf
U.S. stocks declined Monday, pulling back one session after the
Dow posted its biggest one-day gain in more than three months.
The Dow Jones Industrial Average declined 85.94 points, or 0.5%,
to 18105.17. The S&P 500 index fell 10.77 points, or 0.5%, to
2105.33. The Nasdaq Composite Index slipped 9.98 points, or 0.2%,
to 4993.57.
Traders said market activity was subdued following Friday's
gains, which saw the Dow advance 1.5%, after the government's
employment report for April indicated the economy was pulling out
of its first-quarter slump. Monday was the fifth slowest trading
day this year, with just 5.6 billion shares changing hands.
With the first-quarter earnings season winding down, traders and
investors say stocks could be in for a quieter spell in the weeks
ahead. No high-profile economic data were released Monday. A report
on April retail sales is due Wednesday, with economists expecting a
0.2% increase.
"People are still digesting that jobs report," said Michael
Antonelli, equity sales trader at Robert W. Baird. "There's really
a lack of catalysts right now."
Still, after last week's gains, major indexes are once again
close to notching record highs. The S&P 500 is back within
striking distance of its closing record of 2117.69, hit on April
24. The Dow is 1% away from its record close of 18288.63, set March
2.
For the year, the S&P has risen 2.3% and the Dow has
advanced 1.6%. Both indexes have increased in four of the past six
weeks, through Friday.
Helping to reassure investors has been the steady stream of
better-than-expected earnings reports in recent weeks. Investors
had been bracing for the first decline in quarterly profits since
2012, with a drop of 4.6% expected by S&P 500 companies at the
start of the earnings season, according to FactSet. With 455
companies reporting, the S&P 500 is now on track for a 0.4%
increase in quarterly earnings.
Many of the trends that eroded corporate earnings in the first
quarter, including the stronger dollar and the swoon in oil prices,
have since abated, which means companies could see better fortunes
in the quarters ahead, said Margie Patel, portfolio manager who
oversees about $3.4 billion in stock and bond investments at Wells
Fargo Asset Management.
"You got most of the bad news out of the way," Ms. Patel said.
"The second, third and fourth quarter might not be as bad as people
were thinking." Ms. Patel continues to favor technology and
health-care stocks in her portfolio, and has scant holdings of
energy stocks.
International stocks were mixed on Monday. The Shanghai
Composite Index rose 3% after China's central bank cut interest
rates for the third time in six months.
Germany's DAX slipped 0.3% and France's CAC 40 fell 1.2%. Greek
stocks fell 2.5%. Another Greek payment to the International
Monetary Fund is due Tuesday.
In commodity markets, gold futures slipped 0.5% to $1183.20 an
ounce. Crude-oil futures lost 0.2% to $59.25 a barrel.
The yield on the 10-year Treasury note rose to 2.267% from
2.148% on Friday. Yields rise as prices fall.
In corporate news, Dish Network Corp. said it lost 134,000
pay-TV subscribers in the first quarter as the rate of
cancellations increased. Still, the company's profit doubled from a
year earlier. Shares fell 0.7%.
Shares of Zulily Inc. gained 5.2% after it was disclosed that
Chinese e-commerce giant Alibaba Group Holding Ltd. took a stake of
more than 9% in the online retailer.
Shares of Actavis PLC gained 3.1% after the company said its
revenue rose a better-than-expected 60% in the first quarter, a
period that included the acquisition of Botox maker Allergan
Inc.
Dean Foods Co. shares rose 6.5% after the company reported a
better-than-expected adjusted profit in the first quarter and gave
an upbeat outlook for the current quarter, as the company benefited
from lower milk costs.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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