Wall Street edges off five-year high, awaits earnings

NEW YORK Tue Jan 8, 2013 4:06am IST

1 of 7. Traders work on the floor of the New York Stock Exchange, January 7, 2013.

Credit: Reuters/Brendan McDermid

Stocks

   

NEW YORK (Reuters) - Stocks lost ground on Monday, as investors drew back from recent gains that lifted the S&P 500 to a five-year high, in anticipation of sluggish growth in corporate profits.

Shares of financial companies dipped after a group of major U.S. banks agreed to pay a total of $8.5 billion to end a government inquiry into faulty mortgage foreclosures. The KBW bank index .BKX, a gauge of U.S. bank stocks, was down 0.3 percent.

Other sectors were hit as well, most notably energy and utilities. The S&P 500 energy sector index .GSPE fell 0.8 percent and the utilities sector .GSPU was off 1.1 percent.

The day's decline came a session after the S&P 500 finished at a five-year high, boosted by a budget deal and strong economic data. The S&P 500 rose 4.6 percent last week, the best weekly gain in more than a year.

"It's a little bit of taking some risk off the table ahead of profit season, you're not going to see anything all that great" on earnings, said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

Earnings are expected to be only slightly better than the third-quarter's lackluster results, and analysts' current estimates are down sharply from where they were in October. Fourth-quarter earnings growth is expected to come in at 2.8 percent, according to Thomson Reuters data.

Aluminum company Alcoa Inc (AA.N) begins the reporting season by announcing its results after Tuesday's market close. Alcoa shares fell 1.7 percent at $9.10.

The Dow Jones industrial average .DJI dropped 50.92 points, or 0.38 percent, to 13,384.29. The Standard & Poor's 500 Index .SPX fell 4.58 points, or 0.31 percent, to 1,461.89. The Nasdaq Composite Index .IXIC lost 2.84 points, or 0.09 percent, to 3,098.81.

Ten mortgage servicers - including Bank of America (BAC.N), Citigroup (C.N), JPMorgan (JPM.N), and Wells Fargo (WFC.N) - agreed on Monday to pay $8.5 billion to end a case-by-case review of foreclosures required by U.S. regulators.

In a separate case, Bank of America also announced roughly $11.6 billion of settlements with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans.

The bank also entered into agreements with Nationstar Mortgage Holdings (NSM.N) and Walter Investment Management WAC.A to sell about $306 billion of residential mortgage servicing rights.

Bank of America shares lost 0.2 percent at $12.09 while Nationstar Mortgage Holdings (NSM.N) jumped 16.8 percent to $38.83.

Citigroup shares were up 0.09 percent to $42.47, and Wells Fargo shares fell 0.5 percent to $34.77.

"The financials probably have the wind behind them now with a lot of the regulations coming out ... the market has to absorb a lot of the gains, and for that reason there's a pullback from this level," said Warren West, principal at Greentree Brokerage Services in Philadelphia.

Shares of U.S. jet maker Boeing Co (BA.N) dropped 2 percent after a Boeing 787 Dreamliner aircraft with no passengers on board caught fire at Boston's Logan International Airport on Monday morning.

Amazon.com (AMZN.O) shares hit their highest price ever at $269.22 after Morgan Stanley raised is rating on the stock. Shares were up 3.6 percent at $268.46.

Video-streaming service Netflix Inc (NFLX.O) shares gained 3.4 percent to $99.20 after it said it will carry previous seasons of some popular shows produced by Time Warner's (TWX.N) Warner Bros Television.

Walt Disney Co (DIS.N) stock fell 2.3 percent to $50.97. The company started an internal cost-cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters.

Volume was lower than average, as 4.78 billion shares were traded on the New York Stock Exchange, NYSE MKT and Nasdaq. This is well below the 2012 average of 6.42 billion per session.

Declining stocks outnumbered advancing ones on the NYSE by 1,629 to 1,363, while on the Nasdaq decliners beat advancers 1,438 to 1,066.

(Reporting By Gabriel Debenedetti; Editing by Kenneth Barry and Nick Zieminski)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Economic Pulse

REUTERS SHOWCASE

Political Pulse

Political Pulse

100 days of Modi: Good for business, not so good for marginalised groups.  Full Article 

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Best Economy

Best Economy

Swiss economy most competitive once again; EU, U.S., Japan improve.  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage