Stocks fall as investors assess four weeks of gains, high valuations

Stocks fell moderately on Monday as investors took a break after four weeks of gains that brought the market to record highs.

Energy companies fell more than the rest of the market as the price of oil took another turn lower. Yahoo’s share price dropped $1.06, or 2.7%, to $38.32 after Verizon Communications announced it would buy most of the tech giant’s Internet businesses for $4.83 billion.

The Dow Jones industrial average lost 77.79 points, or 0.4%, to 18,493.06. The Standard & Poor’s 500 index lost 6.55 points, or 0.3%, to 2,168.48 and the Nasdaq composite lost 2.53 points, or 0.1%, to 5,097.63.

With the slow summer trading season and lack of economic news, traders say there are few reasons to be buying the market right now.

“This is a broad, but benign, sell-off,” said Ryan Larson, head of U.S. equity trading for RBC Global Asset Management.

Larson pointed to the recent price-to-earnings ratio on the S&P 500, or the amount of money that investors are paying for each dollar of earnings. The current figure is nearly 20, far above the 14 to 16 that investors are typically comfortable with.

“It’s another reason why the market looks fatigued at the moment,” he said.

Oil prices continued on their month-long slide. The price of crude fell $1.06, or 2.4%, to close at $43.13 a barrel. U.S. crude oil is down 12% this month. Brent crude, the global benchmark, dropped 97 cents, or 2.1%, to close at $44.72 a barrel in London.

Later this week the Bank of Japan and Federal Reserve will hold policy meetings. With Japan’s economy barely growing, economists are speculating whether its central bank may push more stimulus, likely lowering its interest rate further into negative territory when it announces its decision on Friday.

The U.S. economy is in better shape than other advanced economies, but expectations are that the Fed will hold interest rates steady and look to raise interest rates later this year. Securities that bet on which way the Fed will move interest rates show only a 10% chance of a rate increase this week. The Fed’s two-day meeting starts Tuesday.

Technology companies will dominate quarterly earnings news this week, including results from Apple, Amazon, Google and Facebook. Their reports are also likely to heavily impact trading this week.

The 2% drop in oil prices dragged down major energy companies. Chevron lost $2.59, or 2.5%, to $103.07 and Exxon Mobil gave up $1.81, or 2%, to $92.20, the two biggest drops in the Dow Jones industrial average.

In other energy trading, wholesale gasoline fell 3 cents to $1.33 a gallon, heating oil fell 3 cents to $1.32 a gallon and natural gas also fell 3 cents to close at 2.75 per 1,000 cubic feet.

U.S. government bond prices didn’t move much. The yield on the 10-year Treasury note held steady at 1.57%. The dollar fell to 105.85 yen from 106.17 yen. The euro rose to $1.0989 from $1.0961.

The price of gold fell $3.90 to $1,319.50 an ounce, silver fell 4 cents to $19.65 an ounce and copper fell 2 cents to $2.22 a pound.

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UPDATES:

2:35 p.m.: This article was updated with closing prices.

8:45 a.m.: This article was updated with more recent prices and additional information.

This article was originally published at 7 a.m.