The Dow Jones industrial average ended almost 50 points lower after closing above 17,000 for the first time last week. Investors moved money into stocks traditionally thought of as safer than broader market: utilities, telecommunication companies and consumer staples.
Stocks that depend the most on a growing economy were among the biggest decliners, including small companies, consumer discretionary names, materials and industrial stocks.
"All eyes have turned to earnings," said
There's a lot riding on this quarter's earnings season. Investors largely believe the weather had an unusually large impact on the U.S. economy in the first three months of year, and that economic activity rebounded in the second three months of this year. Many companies blamed the weather for their disappointing first quarter results.
Secondly, stocks are trading at all-time highs and investors will need Corporate America to deliver on profits in order to justify these record-high prices.
"As we've emphasized in recent weeks, stocks are not cheap, but we believe they can climb modestly higher in the second half (of the year) amid continued economic improvement," said
The Dow Jones industrial average lost 44.05 points, or 0.3 per cent, to 17,024.21. The Standard & Poor's 500 index lost 7.79 points, or 0.4 per cent, to 1,977.65 and the Nasdaq composite fell 34.40 points, or 0.8 per cent, to 4,451.53.
The Dow reached a record and a new 1,000-point milestone last Thursday by closing above 17,000 for the first time. That followed a strong U.S. jobs report. U.S. markets were closed Friday for the
The Russell 2000 index, which is made up primarily of small-company stocks, fell more than the rest of the market. The index lost 1.7 per cent, versus the 0.4 per cent decline in the S&P 500, which is made up of large companies.
Another sign that investors were hesitant to place big bets ahead of corporate earnings reports could be seen in Monday's low trading volume. Roughly 2.6 billion shares traded hands on the
Aluminum mining giant
"I think we're going to exceed expectations," Tanious said. "Companies were able to post 6 per cent earnings growth in the first quarter, even with the U.S. economy contracting. Now that we've seen a rebound in economic activity, I think we're looking at a pretty good earnings season."
Major airlines stocks fell after the
Investors also tried to reduce their exposure to risk by buying U.S. government bonds. The yield on the U.S. 10-year note fell to 2.62 per cent from 2.64 per cent late Thursday.
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