WFR Sunedison, Inc.

By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

Virgin America soars 42%; PulteGroup sinks 8%

U.S. stocks were trading at session lows Monday as losses for industrials and consumer-discretionary companies gathered steam late in the trading day.

Meanwhile, a fresh drop in oil prices weighed on risk appetite, offsetting last week's comments from Federal Reserve Chairwoman Janet Yellen, whose comments about a cautious approach to lifting rates were read as dovish by Wall Street.

The S&P 500 was down 9.29 points, or 0.4%, at 2,063, hamstrung by a roughly 1% decline in industrials consumer-discretionary stocks. An 8% tumble in shares of PulteGroup Inc. underscored some of the downbeat moves in the S&P 500's worst-performing sectors, which offset a 1.1% jump in health-care on the back of soaring shares of Edwards Lifesciences Corp.

The Dow Jones Industrial Average was 73 points, or 0.4%, lower at 17,756, led by sharp a drop in Nike (NKE), down 3%.

Meanwhile, the Nasdaq Composite was off by 23 points, or 0.5%, at 4,890.

"I think we're starting to move from a market pulled by the Fed to one that is pulled more by fundamentals," said John Manley, chief equity strategist at Wells Fargo Advantage Funds, noting that corporate ratings are set to come out soon and they could set the tone for the Wall Street's moves.

Monday's action came after the S&P 500 posted the biggest weekly gain in a month (http://www.marketwatch.com/story/us-stock-futures-retreat-ahead-of-jobs-report-2016-04-01), after nonfarm payrolls and other economic data convinced investors the Fed won't be rushing to increase interest rates in April

After a sharp selloff at the beginning of the year and a strong rebound in March, the question on investors' minds is "now what?" said Colin Cieszynski, chief market strategist at CMC Markets.

"The market is getting close to where it topped last year, so it could be running into a ceiling. The big question is whether it will go sideways from here or it will see a sharp correction," he said.

The answer to that question could be tied to the gyrations in oil prices, a few analysts said.

Crude-oil futures fell 3% as comments by a Saudi Arabian official dampened hopes (http://www.marketwatch.com/story/oil-prices-under-pressure-as-hopes-dim-for-production-cuts-2016-04-04) for an output-freeze deal from major oil producers. Major oil producers are set to hold a meeting April 17 to discuss measures to curb production.

Lower oil prices have tended to mean a slump in equities, following a recent trend of strong correlation between oil and stock prices, but that correlation has been breaking down somewhat (http://www.marketwatch.com/story/heres-why-the-relationship-between-oil-and-stocks-is-fading-2016-04-04).

The strong correlation between oil and stock prices "has always been a bit of a mystery as it has no basis on fundamentals," said Tina Byles Williams, chief investment officer at FIS Group.

But as investors will turn their attention to the earnings season over the next month, starting next week with Alcoa Inc. (AA), the recent equity-market rally could fizzle out quickly, as earnings are projected to tumble, which should weigh on sentiment, Williams said.

"While the markets called a do-over on the year last week, with the S&P 500 in particular getting back all of what it lost, the same can't be said for U.S. corporate earnings," said Peter Boockvar, chief market analyst at The Lindsey Group.

In early January, first-quarter S&P 500 earnings were expected to be flat year-over-year and up 2.5% excluding energy, according to data from The Lindsey Group. As of Friday, those estimates are now for earnings to fall by 9.5% year-over-year and by 4.7% excluding energy.

A silver lining is the fact that investors aren't facing a strong dollar , something that has weighed on corporate earnings over the past year or so.

Also read:Dollar, oil and Fed to drive stocks as earnings and data take back seat (http://www.marketwatch.com/story/dollar-oil-and-fed-to-drive-stocks-as-earnings-and-data-take-backseat-2016-04-02)

Weak oil prices and a drop in the Nikkei 225 index on Monday drove investors into the Japanese yen (http://www.marketwatch.com/story/dollar-drifts-lower-against-japanese-yen-on-cautious-fed-view-2016-04-04).

Economic docket:Factory orders fell sharply in February (http://www.marketwatch.com/story/factory-orders-slump-17-in-february-2016-04-04), after a collapse in bookings for oil equipment and planes, the Commerce Department said on Monday.

Looking ahead, investors will closely scrutinize the Fed's minutes from its March meeting, due to be released on Wednesday.

Read:Hiring boom says economy not running on empty (http://www.marketwatch.com/story/hiring-boom-says-economy-not-running-on-empty-2016-04-03)

Stocks to watch: Shares of SunEdison Inc. (SUNE) plunged 53% after news that the company is preparing to declare bankruptcy amid an investigation by the Securities and Exchange Commission.

Shares of Virgin America Inc. (VA) soared 42% after Alaska Air Group Inc. (ALK) said it would buy the airline for $57 a share in cash (http://www.marketwatch.com/story/alaska-air-group-to-buy-virgin-america-in-4-billion-deal-2016-04-04), a price that is above the $38.90 closing share price on Friday.

Tesla Motors Inc. (TSLA) rose 5.3% after Chief Executive Officer Elon Musk said reservations for its new, more affordable, Model 3 electric car have topped 276,000 (http://www.marketwatch.com/story/tesla-model-3-reservations-top-276000-musk-says-2016-04-03) since the company starting accepting deposits on March 21.

PulteGroup Inc. (PHM) saw its shares fall 7.1% after it announced that its Chairman and Chief Executive Officer, Richard Dugas Jr., planned on stepping down.

Edwards Lifesciences Corp. (EW) reached an all-time high of $107.88 (http://www.marketwatch.com/story/edwards-lifesciences-shares-hit-all-time-high-on-upbeat-results-upgrades-2016-04-04), soaring nearly 17%, on Monday after the medical-device marker reported positive results from its "Sapien 3" device used in less-invasive heart surgeries and saw its price-target raised by Wall Street firms.

Read:'Affordable' Tesla Model 3 revealed as Elon Musk charges up the crowd (http://www.marketwatch.com/story/tesla-model-3-elon-musk-charges-up-the-crowd-for-mass-appeal-car-2016-04-01)

Other markets: In Asia (http://www.marketwatch.com/story/japan-stocks-gain-on-good-enough-us-jobs-report-2016-04-03), the Nikkei 225 index fell 0.3%. China, Hong Kong and Taiwan stock markets were closed for a holiday. European stocks (http://www.marketwatch.com/story/european-stocks-higher-but-orange-bouygues-lag-in-telecom-selloff-2016-04-04) ended higher, while gold prices dropped (http://www.marketwatch.com/story/gold-drops-as-dollar-traders-position-for-higher-rates-2016-04-04)0.3% as dollar traders positioned for higher rates.

(END) Dow Jones Newswires

April 04, 2016 14:40 ET (18:40 GMT)

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