Wall Street fell on Monday, retreating from last week's record highs and mostly extending its declines after a top Federal Reserve official said the central bank is closer to curbing its bond purchases.
The losses steepened in early afternoon trading after Richard Fisher, the president of the Federal Reserve Bank of Dallas, said the Fed should cut its massive bond-buying program next month, unless economic data takes a decided turn for the worse.
"It's a minor move in the market because we knew that this was Fisher. If Bullard came out and said this, then that would've created a huge move," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
"It's a guessing game every day because different speakers have different opinions."
While Fisher has held reservations about the Fed's bond- buying program, St. Louis Fed President James Bullard has said he is not prepared to start reducing the stimulus program, adding that there needs to be more economic data before moving to taper.
Blue chips were the day's top decliners, with the Dow Jones industrial average down 0.4 per cent and underperforming the broader market. Shares of The Travelers Companies Inc and United Technologies Corp were the Dow's top decliners. Travelers shares fell 1.1 per cent to $83.07. United Technologies shares slid 1.1 per cent to $106.63.
The Dow Jones industrial average was down 55.04 points, or 0.35 per cent, at 15,603.32.
The Standard & Poor's 500 was down 3.53 points, or 0.21 per cent, at 1,706.14.
The Nasdaq Composite was down 1.02 points, or 0.03 per cent, at 3,688.57.
The S&P 500 has risen for five of the past six weeks, gaining more than 7 per cent over that period. The index closed at an all-time high on Friday despite a disappointing read on the labor market, which showed that hiring slowed in July.
Given that advance, further gains may be hard to come by at these levels, especially with the earnings season almost over.
"After last week with several big market-moving events, this week is probably all about trading sideways. But the market does seem to be in a bullish mood and in the absence of bad news, it will hold these levels and move slowly higher," said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.
On the earnings front, shares of Tyson Foods climbed 4.1 per cent to $29.68 after giving a full-year revenue outlook that was above expectations.
In contrast, US-listed shares of HSBC Holdings Plc fell 4.4 per cent to $55.40 after the company reported a drop in revenue, hurt by slower emerging markets.
Of the 391 companies in the S&P 500 that have reported earnings for the second quarter, 67.8 per cent have topped analysts' expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 per cent have reported revenue above estimates, more than in the past four quarters but below the historical average.
In the latest snapshot of the US services sector, the Institute for Supply Management's July non-manufacturing index came in at 56, above expectations for a reading of 53 and exceeding the previous month's level of 52.2. The data had little impact on stocks.
While the recent payrolls report was weaker than expected, some investors were encouraged that it meant the US Federal Reserve was more likely to hold steady with its monetary stimulus, which has contributed to the S&P 500's gain of almost 20 per cent this year.
Big tech names like Apple and Facebook supported the Nasdaq. Apple Inc shot up 1.5 per cent to $469.44. Facebook Inc jumped 2.5 per cent to $38.99.
In the pharmaceutical and biotech sectors, US-listed shares of Compugen Ltd soared 47 per cent to $8.02 after the company said it would enter into a cancer research partnership with Bayer AG.
Copyright @ Thomson Reuters 2013
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