Stock Market Today: Stocks Dip From Record Highs on Eve of Earnings Season

NEW YORK (TheStreet) -- U.S. stock indices were dipping Monday following the long July 4 weekend and a record performance that saw the Dow Jones Industrial Average close well over the 17,000 threshold.

The Dow fell below the psychologically important milestone set on Thursday, slipping 0.42% to 16,995.92. The S&P 500 was off 0.48% to 1,975.82. The Nasdaq was down 0.75% to 4,452.17. 

The next set of catalysts for stocks will be second-quarter earnings season, beginning on Tuesday with Alcoa's (AA) results after the closing bell and earnings reports from Family Dollar Stores (FDO) on Thursday and U.S. mortgage lender Wells Fargo (WFC) on Friday.


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Analysts forecast second-quarter per-share earnings for companies in the S&P 500 will record a substantial gain from the first quarter. As of July 3, S&P Capital IQ consensus estimates now point to a second-quarter 2014 EPS increase of 6.6%, nearly twice the 3.4% year-over-year gain reported for the first quarter. Seven of the 10 sectors in the S&P 500 are forecast to show second-quarter growth rates that exceed first-quarter gains, with the biggest sequential increases coming from the energy and materials sectors.

"Expectations were for negative growth year over year for the first quarter and we pulled one out with 2.1% growth. That's a testament to companies' ability to do business even in a horrible economic backdrop," Voya Investment Management senior market strategist Karyn Cavanaugh told TheStreet. "A lot of companies ratcheted down their expectations because of that bad GDP outlook for the first quarter ... but I think we'll end up doing better than we expected."

European and Asian markets drifted down on Monday, as traders took a break following last week's rallies and awaited the reopening of the U.S. markets after the July 4 holiday. On the macro front, disappointing German industrial production figures weighed on eurozone markets. Economists had expected output to flatline in May. Instead, production fell 1.8% month-on-month from April.

Stocks in the headlines Monday include American Apparel (APP), Archer Daniels Midland (ADM), Lorillard (LO), and American Express (AXP).

American Apparel is in talks to raise new financing from hedge fund Standard General that would allow the company to pay off a loan that came due after it ousted founder Dov Charney, people familiar with the matter told The Wall Street Journal. American Apparel shares were popping 2.4%.

Shares of Lorillard were more than 1% lower after rising 5.3% on Thursday to $64.41 following a CNBC report that the tobacco company and rival Reynolds American (RAI) may be merging by the end of the month.

A trial begins Monday in which American Express is set to face off against the U.S. government and 17 states over claims the credit card giant stifles competition from credit card providers that charge lower processing fees. American Express shares were 0.39% lower.

Archer Daniels Midland reached a deal to buy Wild Flavors, a flavors and ingredients maker for food, for 2.2 billion euros ($3 billion) in cash. Shares were up 1.6% to $46.48.

-- By Andrea Tse and Keris Alison Lahiff in New York.

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