Stocks Slouch Out of April

The Dow pulls back modestly, but the Nasdaq is punished.
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Updated from 4:25 p.m. EDT

Blue chips weren't able to hold their gains and tech stocks were hammered Monday, as traders opted to take profits following a big month for the bulls on Wall Street.

After touching an intraday record of 13,162.06, the

Dow Jones Industrial Average

turned negative late and closed down 58.03 points, or 0.44%, at 13,062.91. Twenty of the Dow's 30 components finished with losses. Among those tempering the declines,

Procter & Gamble

(PG) - Get Report

gained 2.3% and

3M

rose 1.5%.

The

S&P 500

lost 11.70 points, or 0.78%, at 1482.37. The

Nasdaq

was hit the hardest, slumping 32.12 points, or 1.26%, to 2525.09.

Stocks were coming off a week in which the New York market advanced, and the Dow ended with three straight record highs above 13,000. The Dow gained 1.2% over the five sessions and entered the weekend at 13,120.94. Meanwhile, the S&P 500 was ahead by 0.7%, and the Nasdaq added 1.2%.

Though Monday was weaker, the market has had a tremendous rally recently, and the major averages closed out April with huge gains. The Dow added 5.7%, the S&P 500 gained 4.3%, and the Nasdaq finished the month with a 4.2% increase.

Paul Nolte, director of investments with Hinsdale Associates, cautioned before the pullback that traders shouldn't be overly optimistic amid the market's run-up.

"There were nine days

this month in which there were more stocks that actually fell in price than rose, masking the strength of the Dow," Nolte said. "Top it off with a bit higher interest rates than year-end, bullish sentiment among investors and valuations that remain among the highest in history, and we are left wondering how much gas is still left in the market's tank."

Volume and breadth were little changed from Friday's levels. About 2.96 billion shares changed hands on the

New York Stock Exchange

, with decliners beating advancers by an 8-to-3 margin. Volume on the Nasdaq reached 2.12 billion shares, with losers outpacing winners 7 to 3.

Among subsector indices, both the Philadelphia Housing Sector Index and the Philadelphia Oil Service Sector Index dropped 2.3%. The Amex Gold Bugs Index fell 1.5%, and the Philadelphia Semiconductor Sector Index lost 1.2%.

Traders had a busy day to start the new week, getting plenty of information with which to make their decisions. Before the open, the Commerce Department said that personal income rose a greater-than-expected 0.7% in March. Personal spending, however, was up only 0.3%, below the anticipated 0.5%.

Excluding food and energy, the personal consumption expenditure price index is now higher by 2.1% over the past year, down from 2.4% in February. Still, the number was still a bit outside of the Fed's comfort zone range of 1% to 2%.

"Inflation pressures are still too high for the

Federal Reserve

to grant the market a reprieve," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Therefore, we would anticipate that the Fed will maintain the rhetoric it presented after the last

Federal Open Market Committee meeting, ending any hope of a rate cut in June."

Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, agreed that the Fed won't make any interest rate changes when it next convenes on May 9.

"Despite the fragility of the economic expansion, inflation remains disturbingly high," he said. "The Federal Reserve should not cut or raise interest rates any time soon. More warnings about inflation from Fed officials are likely to follow today's report, but investors should discount the likelihood of any change in interest rate policy."

Just after the market opened, the Chicago purchasing managers' index, a report on the factory sector in the Midwest, came in weaker than expected at 52.9. A reading of 55 was expected. Meanwhile, a separate report on construction spending showed a 0.2% rise during March, coming in ahead of estimates for a 0.1% gain.

Treasuries were stronger on the long and short ends after the numbers. The 30-year bond rose 31/32 in price, yielding 4.81%, and the 10-year note climbed 19/32 to yield 4.63%.

Profit reports also continued to pour in. Dow component

Verizon

(VZ) - Get Report

posted first-quarter earnings of $1.5 billion, or 51 cents a share, down from a year ago. Excluding items, the telecom giant earned 56 cents a share, which topped the Thomson First Call average estimate. Verizon added 29 cents, or 0.8%, to $38.18.

Elsewhere,

Humana

(HUM) - Get Report

beat estimates and guided higher, and

RadioShack

(RSH)

said its adjusted results topped expectations.

Pitney Bowes

(PBI) - Get Report

reaffirmed its forecast.

Away from earnings,

Delta Air Lines

(DALRQ)

said that it has emerged from bankruptcy, thanks to a restructuring plan that has saved the company $3 billion in costs a year. The company's stock will return to the

New York Stock Exchange

after spending the last 19 months trading over the counter.

Continental Airlines

(CAL) - Get Report

gained ground after Goldman Sachs upgraded the stock all the way to buy from sell. The firm cited a positive risk/reward profile, and said the airline was more likely to achieve consensus estimates than its rivals. Shares of Continental rose 31 cents, or 0.9%, to $36.56.

As for commodities, June crude futures fell 75 cents to finish at $65.71 a barrel, while gold added $1.70 to $683.50 an ounce.

Overseas, stocks were mixed in Asia, where Hong Kong's Hang Seng fell 1% and China's CSI gained 2.5%. Markets were closed in Japan. Europe was generally higher, with Frankfurt's Xetra DAX adding 0.4% and London's FTSE up 0.5%.