By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks ended Monday lower in a
volatile session as worries over emerging-markets currencies
unsettled investors. Stocks began the day on a higher note
following upbeat results from Caterpillar, but fell after home
sales data showed a larger drop in December than anticipated.
Indexes tested key technical levels adding to the steep losses
from their worst week in over a year, after downbeat data from
China and selloffs in emerging-markets currencies triggered a
global flight from equities.
The S&P 500 (SPX) ended the session 8.73 points, or 0.5%,
lower at 1,781.56, after briefly venturing into positive territory
in late trade. The Dow Jones Industrial Average (DJI) closed down
for the fifth-straight session. The blue-chip index opened higher,
buoyed by upbeat earnings and forecast from Caterpillar Inc, but
closed 41.23 points, or 0.3%, lower at 15,837.88.
The Nasdaq Composite (RIXF) was the worst performing index on
Monday. At session lows, the index fell through its 50-day moving
average, but pared some of the losses in late trade. The tech-heavy
index lost 44.56 points, or 1.1%, to 4,083.61. Read the recap of
the stock market live blog.
"Markets are looking for an excuse to take money off the table,
as we had a huge rally last year, said Scott Wren, senior equities
strategist at Wells Fargo Advisors.
"We are telling our retail investors that it is a buying
opportunity and instead of getting out, they should be considering
putting more cash to work. Retail investors should be welcoming
such pullbacks, as the 12-month outlook for stocks, especially
sectors such as industrials, tech and consumer discretionary, which
are usually hit the most during such selloffs and become cheap," he
added.
Frank Fantozzi, president and founder of Planned Financial
Services, believes recent selloffs in the U.S. stock market are
driven by temporary nervousness and anxiety, but said several years
of bull markets lie ahead of us.
"Investors believe markets rallied too much at the end of last
year. We would not be surprised to see a 10% correction sometime
this year," Fantozzi said.
"We are optimistic about 2014, as capital spending by companies
has picked up and will continue to rise, according to leading
indicators data. If companies believe the economy is in good shape,
then we will see decent earnings, which will support a further rise
in the S&P 500," he added.
Upbeat results from Caterpillar Inc. initially lifted the Dow,
but gains were capped amid broad-based selling. Shares of
Caterpillar Inc. (CAT), seen as an economic bellwether for global
activity, rose 5.9%. The company posted fourth-quarter earnings per
share of $1.54, topping forecasts, and a 44% profit gain. Cost
cutting offset a sales drop of 10%. Caterpillar gave a forecast
that beat analysts estimates for the year, and said it expects a
$1.7 billion buyback in the first quarter of this year.
Sales of new single-family homes fell in December, but the whole
of 2013 saw the highest sales level in five years, the government
reported Monday. Sales of new single-family homes dropped 7% in
December due to harsh winter weather. The median price of new homes
ticked up in December and for 2013, the median price hit $265,800,
up 8.4% from the prior year, the strongest annual growth since
2005.
Read: How much gas in economy's tank? Let's see
Homebuilders fell after the housing data release and several
ratings downgrades. KB Home was downgraded to underweight from
equalweight and Toll Brothers' rating was cut to equal weight from
overweight.
Shares in KB Home (KBH) fell 2.7%, while Toll Brothers' (TOL)
shares lost 1.6%.
Shares in Google Inc (GOOG) fell 2% after the company said it
bought artificial-intelligence company DeepMind. Samsung
Electronics Co. and Google also signed a long-term cross-licensing
deal on technology patents.
Shares in Care.com Inc (CRCM), which jumped more than 40% on
debut on Friday, continued to rise, adding 2.5%.
Apple Inc (AAPL) shares slid more than 5% afterhours, as the
tech group missed analysts forecast on sales of iPhones, even
though earnings per share beat estimates.
Investors will also focus on the Federal Reserve this week as
the central bank will take center stage on Wednesday. Most
observers expect the central bank to cut its bond-buying again, by
about $10 million to $65 billion a month. Expectations of Fed
tapering are among the reasons Wall Street suffered its worst
weekly performance in more than a year last week.
In other markets, European stocks ended lower on Monday, while
Asia followed up those Wall Street losses with a 2.5% drop for the
Nikkei 225 Index and a 2% loss for the Hang Seng Index . Gold pared
losses and natural-gas prices(NGG14) fell.
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