By Corrie Driebusch And Saumya Vaishampayan
U.S. stocks edged lower Monday after two consecutive weeks of
gains.
The Dow Jones Industrial Average slipped 60 points, or 0.3%, to
17998 and the S&P 500 index shed six points, or 0.3%, to 2096.
The Nasdaq Composite, meanwhile, added a fraction to 4996.
Earlier, the Nasdaq Composite climbed back above 5000 for the
first time in nearly three weeks. In early March, the index rose
above the 5000-point level for the first time in almost 15 years.
As of Friday's close, the index was 1% from its record close of
5048.62, reached on March 10, 2000.
Traders said Monday was a quiet day in the markets, a continuing
trend for U.S. equities. On Friday, just 5.6 billion shares changed
hands, making it the second-lowest volume day of 2015.
Market participants are watching closely first-quarter earnings
and the Federal Reserve's monetary policy. The Fed is widely
expected to raise short-term rates later this year after keeping
them near zero since December 2008.
On Tuesday, J.P. Morgan Chase & Co. and Wells Fargo &
Co. are set to report quarterly results, setting the tone for the
financial sector.
"Investors are anticipating the first Fed hike, and that,
coupled with pretty full valuations, is going to make for a
sideways market for the rest of the year," said Wayne Lin, a
portfolio manager at QS Investors, which manages about $19 billion.
"It's going to have to be earnings to drive the market higher."
Some investors say they're waiting until companies report
first-quarter earnings before making major changes in their
portfolios. First-quarter earnings are projected to decline
year-over-year, with the strong dollar expected to hit earnings of
companies with significant operations overseas, while low oil
prices should continue to weigh on earnings in the energy sector.
As of Friday, companies in the S&P 500 are expected to post a
4.8% fall in earnings, according to FactSet. Energy earnings are
expected to slump 65% from a year earlier.
"Earnings growth for the full year has to come down," said Gail
Dudack, chief investment strategist at Dudack Research Group, a
division of brokerage Wellington Shields & Co.
Ms. Dudack said she remained positive on U.S. stocks in the long
term as many of the first quarter's headwinds, such as severe
winter weather, would prove fleeting. She said she didn't expect
the dollar to strengthen much more.
"We have a lot of challenges," said Ms. Dudack. "Many of them
are external to the U.S. and they will definitely impact earnings,
but in the longer run, the U.S. economy is demonstrating low but
stable growth, which is a good thing for the stock market," she
added.
The economic calendar is light Monday, with no major reports
scheduled for release. Investors will get a look at retail sales,
inflation and industrial production in March later in the week.
In corporate news, Sears Holdings Corp. said it has formed a
joint venture with mall owner Simon Property Group Inc., the latest
move by the struggling retailer to cash in on the value of its real
estate. Sears shares rose 1.6%.
General Electric Co. shares fell 2.8%. The conglomerate's plan
to divest its banking operation GE Capital over the next two years
boosted shares last week, leading to GE's largest one-week
percentage gain since May 2009.
Stocks rose Friday, buoyed by GE's gain, with the Dow adding
0.6% to 18057.65 and the S&P advancing 0.5% to 2102.06. The Dow
and the S&P notched their second weekly gain in a row.
European stocks were mixed, though moves were muted. Germany's
DAX slipped 0.3% and France's CAC 40 rose 0.3%.
Gold futures inched down 0.5% to $1199.30 an ounce. Crude-oil
futures declined 0.5% to $51.91 a barrel. The yield on the 10-year
Treasury note fell to 1.936% from 1.950% on Friday. Yields rise
when prices fall.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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