By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks closed lower on Monday,
with the S&P 500 index falling for a third consecutive session
after weaker-than-expected services-sector data.
The Dow Jones Industrial Average (DJI) fell 44.89 points, or
0.3%, to 16,425.10.
The S&P 500 (SPX) dropped 4.60 points, or 0.3%, to 1,826.77,
and the Nasdaq Composite (RIXF) lost 18.23 points, or 0.4%, to
4,113.68. For both indexes, it was the third straight day of
losses.
"After the superb gains in 2013, a modest pullback in the
S&P 500 is both warranted and understandable," said Terry
Sandven, senior equity strategist at U.S. Bank Wealth
Management.
"If there is a pullback, it is likely to get to the 50-day
moving-average level, which is a 2% or 2.5% drop from current
levels, before we see buyers move back in," Sandven said.
"However, we think the environment is favorable for equities in
2014, as the economy continues to improve, valuations are not
extreme and inflation, which is the key driver, is benign," he
added.
The Institute for Supply Management said Monday its services
index for December decelerated to 53% from 53.9% in November. While
the number still indicates expansion, it lagged the 55% expected by
economists polled by MarketWatch. In a separate report, orders for
goods produced in U.S. factories jumped 1.8% in November, beating
expectations of a 1.6% rise. The increase, led by orders for
durable goods, suggests the manufacturing sector enjoyed stronger
growth than the services side of the economy toward the end of last
year.
Last week, the ISM manufacturing data showed that the increase
in new orders last month was the largest in more than
two-and-a-half years, while manufacturing employment
accelerated.
The overall improving economy, along with the falling
unemployment rate and an improving housing market, has prompted the
Federal Reserve to begin tapering its monthly asset-buying program
by $10 billion to $75 billion a month. The U.S. Senate is expected
to confirm Janet Yellen, currently the Fed's vice chair, as the new
Fed chief in a vote on Monday.
In corporate news:
* Boeing Co. rose 0.6% to close at $138.41. Late Friday,
Boeing's largest union voted to accept a new contract that will
keep manufacturing for the planned 777X and its wings in Washington
state. Analysts at Bernstein Research reiterated the stock's
outperform rating and raised the target price to $165 from $156,
noting that under the terms of the new agreement there will be no
strikes for the next ten years.
* Shares in SolarCity Corp. soared 7.2% after analysts at
Goldman Sachs upgraded the stock to buy. The analysts also
downgraded First Solar Inc. from buy to sell, sending the shares
down 9.7%. The sliding of the stock the restrictions for short
sales at 10:48 a.m., according to an alert sent out by Nasdaq
OMX.
* Twitter Inc. shares dropped 3.9% after Morgan Stanley cut the
social media company to underweight from equalweight, with a price
target of $33. "As competition for online ad dollars intensifies,
we guide investors to Google and Facebook, dominant platforms with
more attractive risk/reward," analyst Scott Devitt wrote.
* Sirius XM Holdings Inc. shares soared late on Friday and rose
7.3% on Monday after Liberty Media offered to buy the satellite
radio company in a stock swap that would value the company at $3.68
a share. Liberty already holds a 52% stake in Sirius.
* Shares in Apple Inc. recovered from earlier losses and closed
0.6% higher, after losing 2.2% on Friday in the wake of a rating
downgrade.
* The battle among men's clothing retailers continued Monday, as
Men's Wearhouse Inc. said it began a cash tender offer worth
roughly $1.6 billion, in which it would buy Jos. A. Bank Clothiers
Inc. shares from current holders at $57.50 a piece. The two
clothiers have been exchanging buyout offers for months. Jos. A.
Bank shares rose 4.5% and Men's Wearhouse ended up 2.2%.
In other markets:
* Asian stocks ended lower after a rising yen hit Japanese
equities and concerns over new listings weighed on Chinese stocks.
Europe stocks also closed lower.
Read more on MarketWatch:
ISM services index steady, aside from orders drop
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