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TheStreet Open House

Not So Fast: S&P 500 Touches Record Highs, Then Pulls Back

NEW YORK (TheStreet) -- Stocks closed short of record highs Monday as investors weighed China's announcements to pursue economic reforms in its banking sector and ease its decades-old one-child policy.

The list of potential reforms promises to be the country's most sweeping changes toward a market-based economy since the 1990s. The proposals cover legal reforms, expanding land rights for farmers as well as the management of state-owned enterprises. The apparent goal is to improve the functioning of state-owned enterprises by encouraging private-sector innovation.

News of the reforms pushed the Dow Jones Industrial Average above 16,000 for the first time ever at nearly the same moment as the S&P 500 attained a previously untouched 1,800 level.

The S&P 500  pulled back to close down 0.38% to 1,791.36. The Dow Jones Industrial Average added 0.07% to 15,973.26, while the Nasdaq slid 0.93% to 3,948.77.

On the NYSE, CRM shares shed 3.1% to $55.51 despite an announcement from the cloud computing giant of a revamped mobile platform, Salesforce1, to keep its existing customers happy. The function will be accessible to existing customers through a free upgrade, allowing them to pool together all of Salesforce.com's offerings and features into customizable mobile and social apps. The platform allows easier mobile access to third party applications from Dropbox, LinkedIn (LNKD), as well as note-taking software maker Evernote.

The announcement coincides with salesforce.com's third-quarter earnings announcement after the market close. The company reported earnings of 9 cents a share on revenue of $1.08 billion. Wall Street expected earnings of 9 cents a share on revenue of $1.06 billion, according to a survey of analysts by Thomson Reuters.

Tyson Foods (TSN - Get Report) shares popped 2.3% to $29.42 after the meat processor topped fourth quarter estimates by a penny at 70 cents a share.

Chinese stocks listed on the NYSE were generally moving higher. China Eastern Airlines (CEA) jumped 6.1% to $19.09 while China Life Insurance LFC surged 7.1% to $45.46. China Unicom (CHU) increased 2.6% to $16.02 as China bellwether Caterpillar (CAT) added 0.36% to $84.04.

"Although we are impressed by the wide-ranging statement of intentions (on Chinese reforms) we are not convinced that there will be a sharp upward trend in stock prices," Capital Economics global economist Jessica Hinds said in a note on Monday.

Major U.S markets reached new record highs Friday on expectations Federal Reserve Vice Chair Janet Yellen, tipped to be the next central bank chief, will maintain current monetary policy until economic data shows solid improvement. Tepid industrial production data today reinforced a mixed-economic outlook.

Investors will be able to tap into further clues on the Fed's stimulus timeline throughout the week.

The National Association of Home Builders Housing Market Index remained steady at 54 in November, against expectations for a result of 55.

Fed Chairman Ben Bernanke is slated to speak in Washington Tuesday evening, followed by the October Fed minutes on Wednesday and weekly initial jobless claims numbers on Thursday.

The Hang Seng China Enterprises Index, or the H-share index, surged 5.7% to 11,307.33 after UBS strategists bolstered their recommendation on China H-shares to "overweight" from "neutral" following the announcements from Beijing.

Hong Kong's Hang Seng closed with gains of 2.73% to 23,660.06 on a nearly tripling of its 30-day average volume. The Nikkei 225 in Japan finished flat on profit-taking after charging to a six-month high of 15,273.61. The DAX in Germany increased 0.63% and the FTSE in London rose 0.42%.

The 10-year Treasury was adding 11/32, diluting the yield to 2.669%, while the U.S. dollar index was down 0.1% to $80.73.

Oil was off 0.85% to $93.68 a barrel. Gold shed 1.2% to $1,272.30 an ounce.

-- By Jane Searle and Joe Deaux in New York 

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