Stocks Take Breather After Recent Surge
NEW YORK ( TheStreet) -- U.S. stocks slumped Monday amid some mild profit-taking ahead of the Federal Reserve's policy meeting later this week.
The Dow Jones Industrial Average finished down less than 3 points, or 0.02%, at 13,073, trading in a tight range of less than 90 points on the day. The blue-chip index snapped a three-day winning streak, failing to follow up on Friday's nearly 2% gain, which was spurred by hopes additional monetary stimulus is on the way soon from the world's central banks.
Breadth was slightly negative among the blue chips as 16 of the Dow's 30 components closed lower. Standouts on the downside were Merck (MRK), JPMorgan Chase (JPM), Intel (INTC) and Hewlett-Packard (HPQ).
JPMorgan was downgraded to hold at Deutsche Bank with the firm saying the risk/reward profile for the stock is less favorable with shares having rallied 19% off recent lows and that earnings expectations may be too high. The stock fell 2%.The biggest percentage gainers were Coca-Cola (KO), Cisco Systems (CSCO) and United Technologies (UTX). AT&T's stock advanced less than 1% after the telecom giant boosted its stock buyback program by 300 million shares after Friday's closing bell. The S&P 500 lost less than a point, or 0.05%, to close at 1385, while the Nasdaq Composite dropped 12 points, or 0.41%, to settle at 2946. The weakest sectors in the broad market were capital goods, health care and consumer cyclicals. Bright spots were utilities, energy and basic materials. U.S. stocks soared Friday after eurozone leaders stepped up their pledges to preserve the single-currency bloc. The Dow finished above 13,000 the first time since May 7. The FTSE in London settled up 1.18% and the DAX in Germany finished up 1.27%. Hong Kong's Hang Seng index settled up 1.61% and the Nikkei in Japan closed up 0.8%. The global markets got a lift as stimulus hopes increased ahead of the Federal Reserve's policy meeting on Tuesday and Wednesday and the European Central Bank's interest rate announcement on Thursday. "At this point in the political cycle I don't think inactivity is acceptable, so therefore I see more QE as a sign that the authorities are taking action," said Dr. Tim Morgan, global head of Research at Tullett Prebon. "When you look at the nonfarm payrolls number, the demographics size is increasing all the time. You've got to generate jobs growth a lot higher just to keep unemployment rate under control." "I applaud what the Fed and the
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