Wall St. Finally Takes a Breather
Profit-takers took control on Wall Street on Monday, ending a seven-session winning streak for key stock market indexes.
The day’s biggest losers included brokerage, trucking and smaller stocks -- all of which had led the market’s rally in recent weeks.
In other trading, oil prices tumbled while precious metals surged, driving platinum above $1,000 an ounce for the first time in 25 years. Long-term Treasury bond yields fell to five-week lows.
On Wall Street, news of mixed holiday sales and a drop in October home sales set a downbeat tone, and share prices declined from the outset of trading.
The Dow Jones industrial average lost 40.90 points, or 0.4%, to 10,890.72, but most broader indexes suffered bigger hits.
The Standard & Poor’s 500 slid 10.79 points, or 0.9%, to 1,257.46, after reaching a 4 1/2 -year high on Friday.
The technology-heavy Nasdaq composite, which also hit a 4 1/2 -year high on Friday, fell 23.64 points, or 1%, to 2,239.37.
The Russell 2,000 index of smaller stocks slumped 12.08 points, or 1.8%, to 671.50.
Losers outnumbered winners by about 2 to 1 on the New York Stock Exchange and on Nasdaq.
While some of the nation’s retailers reported a solid opening to the holiday shopping season, other merchants said shopper traffic tailed off once Friday’s bargains passed.
Investors pulled back from many retail shares, including Federated Department Stores, which slid $2.49 to $64.58, and J.C. Penney, which dropped $1.22 to $52.88.
Sharply lower oil prices did little to boost the market, and instead hurt the S&P; 500 by clipping energy stocks such as Exxon Mobil, off $1.37 to $58.74.
Forecasts for mild weather in the Northeast drove near-term oil futures in New York down $1.35 to $57.36 a barrel.
Some analysts said stocks were simply overdue for a breather. The market has climbed for most of November on optimism about the economy and as some traders bet on the traditional year-end rally.
This week brings a spate of economic reports on gross domestic product growth, spending and employment. “People might also be wanting to take gains off the table ahead of these reports, not knowing how they’re going to turn out,” said Rick Pendergraft, a trader with Schaeffer’s Investment Research.
The weak housing report on Monday helped drive Treasury bond yields lower, because a faltering housing sector could undercut consumer spending and hasten the end of the Federal Reserve’s credit-tightening campaign, analysts said.
The 10-year T-note ended at 4.40%, down from 4.43% on Friday and the lowest since Oct. 21.
In metals futures trading, gold neared $500 an ounce, rising $6.20 to $498.30, and platinum shot up $16.80 to $1,001.10 an ounce, topping $1,000 for the first time since 1980. Some investors and traders have been turning to precious metals as a hedge against inflation and against volatility in currency markets.
Among the day’s highlights:
* Retailers sliding on weekend sales reports included Wal-Mart, down 49 cents to $50; Target, down 51 cents to $54.72; and Kohl’s, off $2.18 to $47.02.
But Pier 1 surged $1.63 to $13.36 after an analyst at research firm Sanford C. Bernstein said the retailer’s November sales would beat expectations.
* Merck weighed on the Dow, tumbling $1.42 to $29.56, as some investors were unimpressed with the drug giant’s cost-cutting plan announced Monday.
* Brokerage shares, recently red hot, fell after research firm Keefe Bruyette & Woods downgraded some of the stocks. Jefferies Group plunged $4.75 to $43.02, Lehman Bros. sank $4.25 to $128.58 and Merrill Lynch lost $1.18 to $67.36.
* Trucking stocks slid. CNF dropped $3.08 to $56.65 after an analyst’s downgrade.
* Builders’ stocks fell on the housing-sales report. Toll Bros. lost $1.54 to $35.01 and KB Home was off $2.27 to $69.63.
* On the plus side, Apple Computer, the maker of the iPod, climbed 32 cents to $69.66 after trading as high as $71.07. Piper Jaffray analysts raised their share-price target for Apple by 16% to $79, citing expectations for a “robust” 2006 product year.
