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 The losses, which picked up late in the session after the S&P 500
briefly traded in positive territory, followed a steep selloff late
last week tied to emerging market concerns. The slide gave the S&P
500 its worst weekly percentage loss since June 2012.
Caterpillar Inc <CAT.N>, however, limited the losses of the Dow and
S&P 500. The stock jumped 5.9 percent to $91.29 after the maker of
mining and construction equipment reported a stronger-than-expected
quarterly profit.
The technology sector led the day's decline, with the S&P 500
technology sector index <.SPLRCT> falling 1 percent and the Nasdaq
underperforming both the Dow and S&P 500. Google <GOOG.O>, off 2
percent at $1,101.23, and Microsoft <MSFT.O>, down 2.1 percent at
$36.03, were among the day's biggest drags.
After the bell, shares of Apple <AAPL.O> fell 5.7 percent to $519.38
after its results showed iPhone holiday sales lagged Wall Street's
expectations.
"There's still a lot of nervous money hanging around," said Bucky
Hellwig, senior vice president of BB&T Wealth Management in
Birmingham, Alabama.
"The Fed is meeting this week, and the consensus is they're going to
proceed with the taper."
The Fed's two-day policy meeting begins on Tuesday. Many market
participants are bracing for the market to sell off if the Fed
decides to keep withdrawing stimulus. In December, the U.S. central
bank announced plans to begin scaling back its massive bond-buying
program.
The Dow Jones industrial average <.DJI> fell 41.23 points or 0.26
percent, to end at 15,837.88. For the Dow, Monday marked a fifth
session of losses.
The S&P 500 <.SPX> dropped 8.73 points or 0.49 percent, to finish at
1,781.56. The Nasdaq Composite <.IXIC> slid 44.56 points or 1.08
percent, to close at 4,083.61.
Last week's heavy selling raised some concerns that the market may
be in for a major correction, especially with the S&P 500 closing on
Friday below its 50-day moving average for the first time since
October 9 and falling further below that level on Monday. The Nasdaq
also ended below its 50-day moving average on Monday.
In another indicator of possible market direction, the Dow Jones
Transportation Average <.DJT> ended down 0.8 percent after dropping
4.1 percent on Friday, its biggest decline since September 2011.
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Some did not consider the recent selling as cause for concern.
"The slowdown in emerging markets isn't prevalent enough to derail
the deepening economic recovery that we're seeing across developed
markets," said Steven Rees, U.S. head of equity strategy at J.P.
Morgan Private Bank in New York.
"We're not expecting a major correction in the market this year."
Another dampener on Monday's sentiment was data showing sales of new
U.S. single-family homes fell more than expected in December, even
though lean inventories and steady price gains suggested sufficient
strength in the housing market.
But Caterpillar was the latest major company to beat on bottom-line
results. Caterpillar's cost cuts and an uptick in demand for
building equipment offset weak sales to the mining industry.
S&P 500 earnings for the fourth quarter are now expected to have
increased 8 percent from a year ago, with 66.7 percent of results so
far beating analysts' profit expectations, Thomson Reuters data
showed. Revenue growth for the quarter is estimated at just 0.5
percent.
Volume was above average for the month. About 8 billion shares
changed hands on U.S. exchanges, compared with the average of 6.8
billion so far this month, according to data from BATS Global
Markets.
Decliners outnumbered advancers on the New York Stock Exchange by
about 3 to 1. On the Nasdaq, more than three stocks fell for every
one that rose.
(Editing by Bernadette Baum, Nick
Zieminski and Jan Paschal)
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