MARKET SNAPSHOT: U.S. Stocks Drop, Retreating From All-time Highs
By Wallace Witkowski and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks finished lower on Monday after comments from Chicago Federal Reserve President Charles Evans knocked them from new all-time highs set earlier in the day.
The S&P 500 index (SPX) finished down 1.18 points, or 0.1%, at 1,666.29, after touching a new high of 1,672.84 during the session.
Energy posted the largest gains of the index's 10 major industry groups with consumer staples being the biggest laggard.
The index traded as low as 1,663.52 in the afternoon after Federal Reserve President Charles Evans said in Chicago that the central bank's policy stance is appropriate and that the improving economy still faces headwinds. Evans is a voting member of the Federal Open Market Committee this year.
While defensive stocks have been dominating the rally for most of the year, there's been new life in cyclical stocks recently, propelling the market into the "free skies" of record highs.
"Energy's been a laggard, but what you've seen in May is a shift into cyclicals driving the market higher," said Dan Greenhaus, chief global strategist at BTIG.
The energy sector rose 1.3% Monday, with the next highest gaining sector being industrials, which was up 0.3%.
Energy is the third best-performing sector in May, behind financials and industrials. Year-to-date, health-care stocks are still the best performers with a 22% gain. Then there's financials with a nearly 22% gain and consumer discretionary, up 21%.
The Dow Jones Industrial Average (DJI) declined 19.12 points, or 0.1%, to close at 15,335.28, with only 11 of its 30 components finishing in positive territory. Intraday, the index touched an all-time high of 15,391.84 and was down as low as 15,314.15.
Merck & Co. (MRK) was the worst performer on the Dow, with a loss of 1.7% Monday.
General Electric Co. (GE) shares finished 0.5% higher after GE Capital Corp. said it would pay its parent company $6.5 billion in dividends and another $4.5 billion in special dividends in 2013.
The Nasdaq Composite index (RIXF) shed 2.53 points, or 0.1%, to finish at 3,496.43. The index touched an intraday low of 3,488.13 and an intraday high of 3,509.41.
More stocks finished higher on the day than declined, however. Advancers outnumbered decliners by about 17 to 13 on the New York Stock Exchange, and by about 13 to 11 on the Nasdaq.
Composite volume topped 3.2 billion for NYSE-listed shares and 1.7 billion for Nasdaq-listed shares by 4 p.m. Eastern.
Even small-cap stocks got in on the rallying action with the Russell 2000 (RUT) index topping 1,000 for the first time ever. The index finished up 1.7 points, or 0.2%, at 997.98, for a new record close.
In deal news, Yahoo Inc. (YHOO) said it would buy social-media site Tumblr for $1.1 billion. Yahoo shares gained 0.2%.
Actavis Inc. (ACT) said it has entered into an all-stock deal worth $8.5 billion to buy Warner Chilcott PLC (WCRX) to create a global specialty pharmaceutical group. Shares of Actavis rose 1.3% and those of Warner Chilcott climbed 2%.
Meanwhile, Dallas Fed President Richard Fisher, who isn't a voting member of the FOMC, said the Fed can only slow the pace of its mortgage-backed securities, as a sudden stop would be "too violent" for the market.
On Wednesday, Fed Chairman Ben Bernanke is due to testify before the Joint Economic Committee about the central bank's economic outlook, and the FOMC will release minutes from its most recent policy meeting.
"This big question is precisely when we'll see the market react to the imminent tighter monetary conditions," said Fawad Razaqzada, market strategist at GFT Markets.
"The longer the rally continues arguably, the bigger the reversion we face, but if the economic backdrop is robust enough, then perhaps the resulting pain will be short-lived," Razaqzada said in emailed comments.
Wall Street advanced to a fourth weekly gain last week. The S&P 500 Index rose 2.1% last week to close at a record of 1,667.47 Friday, its 16th record close this year. Similarly, the Dow Jones Industrial Average rose 1.6% on the week to 15,354.40, its 21st record of the year.
By Wallace Witkowski and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks finished lower on Monday after comments from Chicago Federal Reserve President Charles Evans knocked them from new all-time highs set earlier in the day.
The S&P 500 index (SPX) finished down 1.18 points, or 0.1%, at 1,666.29, after touching a new high of 1,672.84 during the session.
Energy posted the largest gains of the index's 10 major industry groups with consumer staples being the biggest laggard.
The index traded as low as 1,663.52 in the afternoon after Federal Reserve President Charles Evans said in Chicago that the central bank's policy stance is appropriate and that the improving economy still faces headwinds. Evans is a voting member of the Federal Open Market Committee this year.
While defensive stocks have been dominating the rally for most of the year, there's been new life in cyclical stocks recently, propelling the market into the "free skies" of record highs.
"Energy's been a laggard, but what you've seen in May is a shift into cyclicals driving the market higher," said Dan Greenhaus, chief global strategist at BTIG.
The energy sector rose 1.3% Monday, with the next highest gaining sector being industrials, which was up 0.3%.
Energy is the third best-performing sector in May, behind financials and industrials. Year-to-date, health-care stocks are still the best performers with a 22% gain. Then there's financials with a nearly 22% gain and consumer discretionary, up 21%.
The Dow Jones Industrial Average (DJI) declined 19.12 points, or 0.1%, to close at 15,335.28, with only 11 of its 30 components finishing in positive territory. Intraday, the index touched an all-time high of 15,391.84 and was down as low as 15,314.15.
Merck & Co. (MRK) was the worst performer on the Dow, with a loss of 1.7% Monday.
General Electric Co. (GE) shares finished 0.5% higher after GE Capital Corp. said it would pay its parent company $6.5 billion in dividends and another $4.5 billion in special dividends in 2013.
The Nasdaq Composite index (RIXF) shed 2.53 points, or 0.1%, to finish at 3,496.43. The index touched an intraday low of 3,488.13 and an intraday high of 3,509.41.
More stocks finished higher on the day than declined, however. Advancers outnumbered decliners by about 17 to 13 on the New York Stock Exchange, and by about 13 to 11 on the Nasdaq.
Composite volume topped 3.2 billion for NYSE-listed shares and 1.7 billion for Nasdaq-listed shares by 4 p.m. Eastern.
Even small-cap stocks got in on the rallying action with the Russell 2000 (RUT) index topping 1,000 for the first time ever. The index finished up 1.7 points, or 0.2%, at 997.98, for a new record close.
In deal news, Yahoo Inc. (YHOO) said it would buy social-media site Tumblr for $1.1 billion. Yahoo shares gained 0.2%.
Actavis Inc. (ACT) said it has entered into an all-stock deal worth $8.5 billion to buy Warner Chilcott PLC (WCRX) to create a global specialty pharmaceutical group. Shares of Actavis rose 1.3% and those of Warner Chilcott climbed 2%.
Meanwhile, Dallas Fed President Richard Fisher, who isn't a voting member of the FOMC, said the Fed can only slow the pace of its mortgage-backed securities, as a sudden stop would be "too violent" for the market.
On Wednesday, Fed Chairman Ben Bernanke is due to testify before the Joint Economic Committee about the central bank's economic outlook, and the FOMC will release minutes from its most recent policy meeting.
"This big question is precisely when we'll see the market react to the imminent tighter monetary conditions," said Fawad Razaqzada, market strategist at GFT Markets.
"The longer the rally continues arguably, the bigger the reversion we face, but if the economic backdrop is robust enough, then perhaps the resulting pain will be short-lived," Razaqzada said in emailed comments.
Wall Street advanced to a fourth weekly gain last week. The S&P 500 Index rose 2.1% last week to close at a record of 1,667.47 Friday, its 16th record close this year. Similarly, the Dow Jones Industrial Average rose 1.6% on the week to 15,354.40, its 21st record of the year.
