By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks turned lower in low volume
on Monday after Secretary of State John Kerry called Syria's
actions 'inexcusable' and a report said the U.S. would hit its debt
limit in October.
Stocks had been modestly higher after a downbeat U.S. economic
report did little to change the belief that the Federal Reserve
would likely tighten monetary policy in September.
"The market is trying to build in ahead of time" the consensus
view that the central bank would begin cutting back on its $85
billion in monthly bond purchases next month, and if not then, in
December, Randy Frederick, managing director of active trading and
derivatives at Charles Schwab, said of Wall Street's pullback the
past three weeks.
Stock indexes fell to session lows after Kerry told a nationally
televised news conference that the United States would hold Syria's
government accountable for using chemical weapons. "By any standard
it is inexcusable," said Kerry of last week's attack that the
Syrian opposition said killed more than 1,300 people.
After rising as much as 39 points and falling 65, the Dow Jones
Industrial Average (DJI) was lately down 40.35 points, or 0.3%, at
14,970.16. The S&P 500 index (SPX) lost 4.54 points, or 0.3%,
to 1,658.96, with telecommunications the worst performing and
health care faring best of its 10 major sectors. The Nasdaq
Composite (RIXF) gained 2.98 points, or 0.1%, to 3,660.76.
Treasury prices rose, with the yield on the 10-year note
(10_YEAR) falling 2 basis points to 2.790%.
The Wall Street Journal cited sources in reporting Monday
afternoon that the U.S. government would hit the debt limit in
mid-October, a more precise estimate than provided in the past.
Orders for U.S. durable goods fell more than expected last
month, down 7.3% in the largest drop in nearly a year. The decline
in bookings for goods intended to last at least three years is the
biggest drop since August 2012 after a 3.9% rise in June, the
Commerce Department said.
Data showing a steep drop in orders for U.S. factory goods were
"really awful," Frederick added.
Trading volume is extraordinarily low, so what had been tepid
climb could also be explained by some bargain hunting by "a few
institutional investors," Frederick said.
Investors are looking at reports on the economy with a
less-than-straight-forward view, given improvement is likely to
bring on reduced monetary easing by the Federal Reserve sooner
rather than later.
The central bank is expected to begin cutting its $85 billion in
monthly bond purchases before the end of the year, with the market
currently debating whether the move would begin in September or
December.
"The August market-correction has been driven by tapering fear
and higher interest rates. It appears to us that tapering is now
almost fully discounted, while Treasury yields may have reached a
ceiling," noted William Riegel, head of equity investment, and Lisa
Black, head of global public fixed-income markets, at TIAA-CREF, in
emailed commentary.
Decliners pulled ahead of advancers on the New York Stock
Exchange, where 372 million shares traded as of 3:50 p.m. Eastern.
Composite volume neared 2.1 billion.
Biotechnology-firm Amgen Inc. (AMGN) rallied 8% a day after the
drug maker agreed to buy Onyx Pharmaceuticals Inc. (ONXX) for about
$10.4 billion to gain access to its three cancer drugs. Shares of
Onyx Pharmaceuticals were up 5.6%.
The dollar (DXY) gained against the currencies of U.S. trading
partners, including the euro (EURUSD) .
After rising 1.9% last week, gold futures for December delivery
(GCZ3) lost $2.70, or 0.2%, to settle at $1,393.10 an ounce. The
price of oil fell, with crude futures for October delivery (CLV3)
off 50 cents, or 0.5%, at $105.92 a barrel.
Up more than 14% on the year and down 3.3% in August, the Dow
industrials on Friday marked a third consecutive weekly drop, the
longest weekly losing streak since mid-November 2012. Both the
S&P 500 and Nasdaq Composite gained last week, with the former
off 1.5% in August but up 16% for the year and the latter up 1% for
the month and 21% year-to-date.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires