By Victor Reklaitis and Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market fell sharply on
Monday as heavy selling in high-growth stocks, which began on
Friday, continued to spill over the broader market.
With Monday's session light on economic data, investors looked
ahead to the start of first-quarter earnings season, and some
analysts sounded downbeat about the coming reports.
The Nasdaq Composite(RIXF) fell 47.97 points, or 1.2%, to
4,079.75, falling below its 100-day moving average. The tech-heavy
index lost 4.6% over the past three sessions, the steepest
three-day loss since November 2011.
The S&P 500 (SPX) ended the day 20.05 points, or 1.1%, lower
at 1,845.04, falling below a key technical level of 1,850 and
erasing year-to-date gains. Financial stocks were among the worst
hit. See also: Financial stocks fall ahead of earnings.
The Dow Jones Industrial Average(DJI) dropped 166.84 points, or
1.3%, to 16,245.87, with Pfizer Inc. (PFE) and American Express
Company (AXP) leading the losses.
Follow MarketWatch's live blog of today's stock-market
action.
Compared with last week, this week is short on top-tier economic
data, so investors are likely to focus instead on earnings reports
from the first quarter. Alcoa Inc. (AA), the aluminum producer and
former Dow component, unofficially kicks off the earnings season on
Tuesday, when it reports results after the closing bell.
"The selloff of high-growth stocks on Friday spilled over to the
rest of the market for the first time and it is worrying," said
Channing Smith, managing director at Capital Advisors.
"With the economy still muddling through and earnings projected
to rise ever so slightly, there are doubts about current
valuations, especially among highflying companies on the Nasdaq,"
he added.
"The weakness has carried over from Friday. It is hard to
imagine how the S&P 500 went from a new all-time high to down
on the year in just two days, but it happened. The momentum names
and technology names were the first to crack, now we are seeing
signs that weakness is moving to the overall market," said Ryan
Detrick, senior technical strategist at Schaeffer's Investment.
Other analysts have said they're a little skeptical of the
naysayers, adding that this will be the 16th quarter or so in a row
where we are being cautioned about earnings.
Among individual stocks on Monday, Internet names TripAdvisor
Inc.(TRIP) and Baidu Inc. (BIDU) fell 2.7% and 3.9%, respectively,
adding to their recent losses.
High-growth companies saw their shares continue to slide. Tesla
Motors, Inc shares dropped 2.2%. Pandora Media, Inc. (P) dropped
5%. Telsa and Pandora are one of the handful of momentum stocks
that got caught up in Friday's rout.
Shares in Facebook Inc. (FB) dipped in and out of negative
territory and closed 0.4% higher. The stock is down more than 18%
from its highest closing level, reached on March 10.
Shares in Apple Inc. (AAPL), which is the heaviest-weighted
component in both the Nasdaq Composite and the S&P 500, also
fell 1.6%.
On the plus side, Questcor Pharmaceuticals Inc.(QCOR) surged 19%
after news that Mallinckrodt (MNK) will buy the drug maker for
about $5.6 billion. (Read more in the Movers & Shakers column
http://www.marketwatch.com/story/questcor-surges-on-buyout-mannkind-sinks-2014-04-07.).
In other markets, Asian and European stock markets lost ground
Monday. The dollar (DXY) edged lower, and oil prices fell, with
Brent taking the biggest hit on reports that Libya may soon reopen
two oil ports. Gold futures dipped and traded below $1,300 an
ounce.
More must-reads from MarketWatch:
Pro-Russia demonstrators storm buildings in Ukraine
Risks in China stimulus
Wal-Mart branded cards to transition to MasterCard
Subscribe to WSJ: http://online.wsj.com?mod=djnwires