By Corrie Driebusch And Saumya Vaishampayan
U.S. stocks edged lower Monday after two consecutive weeks of
gains.
The Dow Jones Industrial Average fell 80.61 points, or 0.4%, to
17977.04 and the S&P 500 index shed 9.63 points, or 0.5%, to
2092.43. The Nasdaq Composite declined 7.73 points, or 0.15%, to
end at 4988.25.
Earlier in the day, 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 Monday's close, the index was 1.2% from its record
close of 5048.62, reached on March 10, 2000.
Traders said there was no single reason for stocks moving lower
on Monday, adding that low trading volumes may have exacerbated
declines. Monday was a quiet day in the markets, a continuing trend
for U.S. equities. On Monday, just 5.4 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.
"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.
On Tuesday, J.P. Morgan Chase & Co. and Wells Fargo &
Co. are set to report quarterly results, setting the tone for the
financial sector.
Leading up to those earnings reports, shares of financial
companies rose on Monday, making the sector the best performer in
the S&P 500.
"The group is more of a value-oriented trade, and a lot of what
we've been seeing in the market of late has been growth-focused,"
said Justin Wiggs, managing director of equity trading at Stifel
Financial Corp. So long as there are no "massive misses" from
banks, portfolio managers of value funds, which lately have been on
the sidelines of the stock market, may buy more shares, he
said.
Overall, 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.
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 0.7%.
General Electric Co. shares fell 3.1%. 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.
European stocks were mixed, though moves were muted. Germany's
DAX slipped 0.3% and France's CAC 40 rose 0.3%.
Gold futures fell 0.4% to $1199.30 an ounce. Crude-oil futures
rose 0.5% to $51.91 a barrel. The yield on the 10-year Treasury
note fell to 1.938% 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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