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TheStreet Open House

Stocks Settle Mixed as Investors Take Breather

NEW YORK ( TheStreet) -- Major U.S. stock averages traded mixed Monday even after Caterpillar (CAT) shares popped, as investors took a breather following a substantial run-up in the benchmark indices the prior week.

The tech-heavy Nasdaq advanced slightly; Apple ( AAPL) shares jumped 2.5%.

The Dow Jones Industrial Average was down 14 points, or 0.10%, at 13,882. Monday brought an end to the previous six consecutive positive sessions. Friday was the index's highest close since October 2007.

Breadth was negative, with losers outnumbering winners 17 to 13. Alcoa ( AA), Boeing ( BA), Bank of America ( BAC) and Travelers ( TRV) shares sank to the bottom.

The top percentage blue-chip gainers were Caterpillar, General Electric ( GE) and Procter & Gamble ( PG).

Caterpillar shares jumped 2% after the heavy construction and mining equipment maker beat fourth-quarter bottom-line expectations and gave cautious guidance.

The S&P 500 was down 3 points, or 0.18%, at 1500. The Nasdaq closed up 5 points, or 0.15%, at 3154 as Apple shares gained. The stock slid by 15% last week after the tech giant's disappointing first-quarter results.

Most sectors in the broader market were down, led lower by basic materials, consumer cyclicals and capital goods. The only sector gainers were technology, conglomerates and utilities.

Volumes totaled 3.31 billion shares on the New York Stock Exchange and 1.86 billion on the Nasdaq. Decliners were outpacing advancers by a ratio of 1.3-to-1 on the Big Board, while advancers were ahead of decliners 1.3-to-1 on the Nasdaq.

David Molnar, partner and managing director at Hightower's Molnar & Nordlicht Group, said with 93% of the S&P 500 trading above their 50-day moving averages, investor bullish sentiment at two-year highs, and the March quarter guidance tending negative, he sees a short-term risk of an overbought situation.

"Our approach towards the market at these levels is to be cautious and use a correction as a buying opportunity," said Molnar. "We see the market heading higher longer term, so we will continue to advocate a healthy high-quality stock allocation as well as adding to those positions at the right price points."

Caterpillar shares were tacked on 2% for Monday after the company posted fourth-quarter profit of $1.91 a share, excluding a non-cash charge of 87 cents a share, on revenue of $16.08 billion. Analysts, on average, were expecting earnings of $1.70 a share in the fourth quarter on revenue of $16.12 billion.

The company said it remains cautious about the global economy. While Caterpillar expects some improvement in the U.S. economy, growth could be relatively weak, the company said.

"We believe China's economy will continue to improve, but not to the growth rates of 2010 and 2011. We also remain concerned about Europe and expect economies in that region will continue to struggle in 2013," Caterpillar CEO Doug Oberhelman said in a press release.

Thomson Reuters had issued a report Friday that said fourth-quarter earnings are expected to grow 2.8% over the year-earlier period.

The report said, of the 141 companies in the S&P 500 that have reported earnings to date for the fourth quarter, 67% have posted earnings above analysts' expectations. This is higher than the long-term average of 62% and higher than the average over the past four quarters of 65%.

Thomson Reuters also said that 64% of companies have reported fourth-quarter revenue above analysts' expectations. This is higher than the long-term average of 62% and higher than the average over the past four quarters of 50%.

The National Association of Realtors said Monday that its pending home sales index fell 4.3% in December to 101.7 after rising 1.7% the previous month. Economists expected the December pending home sales index to increase by 0.3%.

Still, contract activity has risen for 20 straight months on a year-over-year basis and the reading remains above the 100 level that points to a normal level of activity. Lawrence Yun, NAR's chief economist, said in a press release that buyer interest remains solid and that supply limitations appeared to be the main factor holding back contract signings in the past month.

The Census Bureau said Monday that durable-goods orders rose 4.6% in December after rising 0.7% in November, with much of the increase attributable to gains in defense and commercial aircraft bookings. Economists, on average, were expecting orders to tick up 1.8% in December.

That said, excluding the transportation factor, durable goods orders rose 1.3%, after increasing 1.2% the prior month. It was the fourth straight month of gains of more than 1% each month. The estimate was for an uptick of 0.7%.

"U.S. business investment apparently enjoyed an unexpected renaissance over the final few months of last year, only getting stronger as the fiscal cliff deadline got closer," said Paul Ashworth, chief U.S. economist at Capital Economics. "Overall, a good set of figures to end last year, but we're still a bit nervous about how the payroll tax hike will affect the consumer figures for January."

The DAX in Frankfurt closed down 0.32% on Monday after soaring to a fresh multi-year high earlier in the session. The FTSE finished up 0.16% at 6294, earlier breaking above 6300 for the first time since May 2008 as financial stocks rallied and investors cheered the stronger-than-anticipated U.S. durable-goods data.

Hong Kong's Hang Seng finished up 0.39%, tracking Friday's rally on Wall Street and strong Chinese market performance. The Nikkei in Japan closed behind by 0.94% as investors took profits after the index rose to fresh highs and paused for more earnings reports.

Gold for February delivery fell $3.70 to settle at $1,652.90 an ounce at the Comex division of the New York Mercantile Exchange, while March crude oil futures closed up 56 cents at $96.44 a barrel.

The benchmark 10-year Treasury was down 5/32 to raise the yield to 1.974%. The dollar was up by 0.08%, according to the U.S. dollar index .

Jos. A. Bank Clothiers ( JOSB ) shares dropped 15.1% after the men's tailored and casual clothing company warned Friday that that its fiscal 2012 net income is expected to be about 20% lower than the prior year.

Facebook ( FB ) shares rose 3% after the stock was upgraded to outperform from market perform at Raymond James. The company reports its fourth-quarter earnings after the markets close Wednesday.

Furiex Pharmaceuticals ( FURX ) shares soared 66.4% after the company confirmed that it and its partner Takeda Pharmaceutical has received approval from the U.S. Food and Drug Administration for three new type-two diabetes therapies.

Keryx Biopharmaceuticals ( KERX ) shares surged 76.6% after the company said that its kidney disease treatment fulfilled late-stage trial targets.

Biogen Idec ( BIIB ) shares gained 2.6%. The biotech company posted quarterly earnings of $1.40 a share, which was below the consensus Wall Street target, even as sales of its multiple sclerosis drug increased. Revenue was roughly in line with estimates.

Hess ( HES) shares popped 6.1% as the company pursues the sale of its terminal network and aims to complete the exit of its refining business by closing its Port Reading, N.J., refinery.

Meanwhile, activist shareholder Elliott Associates said it was seeking regulatory clearance to acquire additional Hess shares valued at more than $800 million.

-- Written by Andrea Tse and Joe Deaux in New York.



>To contact the writer of this article, click here: Andrea Tse.

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