By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks moved lower as cautious
investors reacted to reports on U.S. service-sector activity, which
was lower than expected, and factory orders, which saw a
higher-than-anticipated increase.
The Dow Jones Industrial Average fell 38 points, or 0.2%, to
16,439.62. The S&P 500 was down 5.3 points, or 0.3% at
1,826.10. The Nasdaq Composite lost 20 points, or 0.5%, to
4,111.56.
Broad-based losses were led by consumer discretionary and
materials stocks, while telecom and financial sectors held on to
modest gains.
"After the superb gains in 2013, a modest pullback in the
S&P 500 is both warranted and understandable," said Terry
Sandven, senior equity strategist at U.S. Bank Wealth
Management.
"If there is a pullback, it is likely to get to the 50-day
moving average level, which is a 2% or 2.5% drop from current
levels, before we see buyers move back in," Sandven said.
"However, we think the environment is favorable for equities in
2014, as the economy continues to improve, valuations are not
extreme and the inflation, which is the key driver, is benign," he
added.
The Institute for Supply Management said Monday its services
index for December decelerated to 53% from 53.9% in November. While
the number still indicates expansion, it lagged the 55% expected by
a MarketWatch-compiled economist poll. In a separate report, orders
for goods produced in U.S. factories jumped 1.8% in November,
beating the expectations of a 1.6% rise. The increase, led by
orders for durable goods, suggests the manufacturing sector enjoyed
stronger growth than the services side of the economy toward the
end of the last year.
Last week, the ISM manufacturing data showed that the increase
in new orders last month was the largest in more than
two-and-a-half years, while manufacturing employment
accelerated.
The overall improving economy, along with falling unemployment
rates and an improving housing market, last month prompted the
Federal Reserve to begin tapering its monthly asset-buying program
by $10 billion to $75 billion last month.
The U.S. Senate is expected to confirm Janet Yellen, currently
the Fed's vice chair, as the new Fed chief in a Monday-afternoon
vote.
In corporate news:
* Boeing Co. pared earlier gains and was 0.5% higher. Late
Friday, Boeing's largest union voted to accept a new contract that
will keep manufacturing for the planned 777X and its wings in
Washington state. Analysts at Bernstein Research reiterated the
stock's outperform rating and raised the target price to $165 from
$156, noting that under the terms of the new agreement there will
be no strikes for the next ten years.
* Shares in SolarCity Corp. soared 9.3% after analysts at
Goldman Sachs upgraded the stock to buy. Analysts at Goldman Sachs
also downgraded First Solar, Inc. from buy to sell, sending shares
down 8.8%. The sliding of the stock triggered the restrictions for
short sales at 10:48 AM, according to an alert sent out by Nasdaq
OMX.
* Twitter Inc. shares dropped 6.1% after Morgan Stanley cut
shares of the social media company to underweight from
equal-weight, with a price target of $33. "As competition for
online ad dollars intensifies, we guide investors to Google and
Facebook, dominant platforms with more attractive risk/reward,"
Analyst Scott Devitt wrote.
* Sirius XM Holdings Inc. shares soared late on Friday and
continue to rise on Monday, trading up 6% after Liberty Media
offered to buy the satellite radio company in a stock swap that
would value the company at $3.68 a share. Liberty already holds a
52% stake in Sirius.
* Shares in Apple Inc. recovered earlier losses and was 0.4%
higher, after losing 2.2% on Friday in the wake of a rating
downgrade. The sharp moves in the heaviest-weighted component of
the Nasdaq Composite affect the index.
* The battle among the men's clothing retailers continued
Monday, as Men's Wearhouse Inc. said it began a cash tender offer
worth roughly $1.6 billion, in which it would buy Jos. A. Bank
Clothiers Inc. shares from current holders at $57.50 a piece. The
two clothiers have been exchanging buyout offers for months. Jos.
A. Bank shares were up 4.6% while Men's Wearhouse was up 2.8%.
In other markets:
* Asian stocks ended lower after a rising yen hit Japanese
equities and concerns over new listings weighed on Chinese stocks.
Europe stocks were mixed.
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