By Saumya Vaishampayan
U.S. stocks fell Monday, pulling back from records as a decline
in oil prices weighed on energy stocks.
The Dow Jones Industrial Average fell 54 points, or 0.3%, to
18086. The S&P 500 lost four points, or 0.2%, to 2106, and the
Nasdaq Composite was nearly flat at 4956.
Traders said activity was quiet, as it has been in recent
sessions. "You have the equity markets coming off all-time
highs...why would people want to trade anything?" said J.T.
Cacciabaudo, head of equity trading at Sterne Agee. "There's
nothing else to do, other than keep your positions on and watch,"
he said.
Oil prices fell, dragging energy stocks lower. Crude-oil futures
declined 3.3% to $49.13 a barrel. S&P 500 energy stocks fell
the most, down 0.7%.
U.S. stocks capped a quiet week with fresh records on Friday.
The Dow gained 0.9% to 18140.44, the index's first record for the
year. The S&P added 0.6% to 2110.30.
Volatility has declined as stocks have hit fresh records. Some
of the international factors that had been contributing to wider
stock swings, such as Greece's ongoing debt negotiations, have
subsided in recent days. The CBOE Volatility Index, which measures
expectations for swings in the S&P 500, fell to 14.3 on Friday,
its lowest level for the year.
"You don't have the central bank support that you used to have,"
said Colin Cieszynski, chief market strategist at CMC Markets,
referring to the end of the Federal Reserve's bond-buying program
last year. Stock-market gains since the financial crisis have been
driven in part by the Fed's easy monetary policy, which made stocks
appear more attractive than competing assets, such as bonds. "At
the same time, you've got a pretty strong U.S. economy, so you end
up stuck in a sideways trading pattern," he said.
Recent gains have propelled the tech-heavy Nasdaq to its highest
level in nearly 15 years. The index is within striking distance of
its all-time high of 5048.62, set in March 2000.
"In the late 90s, there were a lot of legitimate companies, like
Cisco [Systems Inc.], that were just wildly overpriced and bid up
because people were so greedy," said David Klaskin, chief
investment officer at Oak Ridge Investments, which manages $4.6
billion. "We're not at that point at all."
As the Nasdaq approaches 5000 this time, he says gains have been
driven by strong performances at companies such as Apple Inc.
"These are companies that make a good investment thesis, and many
of them focus on dividends, which was unheard of back then," he
said, referring to tech stocks such as Apple, Microsoft Corp. and
Intel Corp., which he owns and for which he says the valuations are
reasonable.
Boeing Co. fell the most on the Dow industrials, contributing
about 25 points to the Dow's overall loss.
In economic news, sales of previously owned homes slipped 4.9%
in January from December to an annual rate of 4.82 million, the
slowest pace in nine months. Economists surveyed by The Wall Street
Journal had expected sales to fall to a level of 4.98 million.
Investors are looking ahead to Federal Reserve Chairwoman Janet
Yellen's testimony before Congress on Tuesday and Wednesday.
European stocks rose, with France's CAC 40 adding 0.6% and
Germany's DAX up 0.7%. Greece and its creditors on Friday agreed to
a four-month extension of the country's bailout program. The
agreement soothed fears about a potential exit from the eurozone in
the short term. Greece now has to present budget cuts and economic
overhauls to the supervisors of the bailout, who will review the
proposals on Tuesday.
Gold futures lost 0.3% to $1200.80 an ounce. Treasury prices
rose, with the 10-year yield falling to 2.074% from 2.136% on
Friday.
Among individual stocks, Valeant Pharmaceuticals International
Inc. said Sunday it would buy Salix Pharmaceuticals Ltd for about
$10 billion. Valeant said it would pay $158 a share in cash for
Salix, just above Salix's Friday closing price of $157.85. Valeant
shares jumped 13%, while those of Salix fell 1.2%.
"Usually when M&A activity heats up, it's a very positive
sign" for stocks, said Mr. Cacciabaudo of Sterne Agee. "You'll see
investors start to chase M&A," he added.
Goldman Sachs Group Inc. lifted the top end on its range of
potential legal losses to about $3 billion. That estimate was about
$2.5 billion in November. Shares fell 1%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
Access Investor Kit for Valeant Pharmaceuticals International,
Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CA91911K1021
Access Investor Kit for Apple, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0378331005
Access Investor Kit for The Dow Chemical Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2605431038
Access Investor Kit for The Goldman Sachs Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38141G1040
Access Investor Kit for Intel Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4581401001
Access Investor Kit for The NASDAQ OMX Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6311031081
Access Investor Kit for Salix Pharmaceuticals Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7954351067