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NEW YORK (CNNMoney.com) -
Stocks slumped Monday as investors bailed out of tech, energy and a variety of other stocks after a five-week market rally.
As of 5:30 p.m. ET, Nasdaq and S&P futures pointed to a mostly flat open for stocks Tuesday when fair value is taken into account.
The Nasdaq composite (down 22.88 to 2,239.37, Charts) lost 1 percent and the S&P 500 (down 10.79 to 1,257.46, Charts) index lost 0.8 percent. The Dow Jones industrial average (down 40.90 to 10,890.72, Charts) lost around 0.4 percent.
The declines Monday followed a more than five-week advance that pushed the S&P 500 and Nasdaq to four-and-a-half-year highs and the Dow 30 to just below four-and-a-half-year highs.
After such an advance, "we needed to take a little breather, and I think the housing report this morning gave people an excuse," said Donald Selkin, director of research at Joseph Stevens, referring to the morning's weak read on existing home sales growth in October.
That report revived worries about the easing of the housing boom that has helped fuel the economy over the last few years.
However, Selkin noted that there were positives in the market Monday that could have supported gains, had the market sentiment been different. Positives included slumping oil prices and falling Treasury bond yields.
But rather than reassure investors, the slide in oil prices just fed into a sell-off in energy stocks, which added to the overall declines.
Yet, the declines did not necessarily signal an end to the recent advance, noted Som Dasgupta, head of equity trading at PNC Financial Services Group.
Dasgupta said that the overall picture for equities remains strong, with earnings and economic growth still impressive. The early upbeat reads on holiday retail sales are encouraging as well. These factors should help a stock advance recharge later in the month, he added.
Tuesday brings several relevant economic reports, including reads on durable goods orders and new home sales. However, the biggest potential market mover is the November consumer confidence report from the Conference Board, said Selkin.
He said that the confidence number is expected to have improved from October due to falling oil prices over the last few months, among other factors.
Monday's movers
Market breadth was negative and volume was moderate, with some Wall Streeters still on vacation after Thanksgiving.
On the New York Stock Exchange, losers beat winners two to one on volume of 1.49 billion shares. On the Nasdaq, decliners topped advancers by seven to three on volume of 1.58 billion shares.
Oil stocks slumped, including Exxon Mobil (down $1.37 to $58.74, Research) and Amerada Hess (down $8.52 to $122.71, Research). The Amex Oil (down 37.01 to 972.30, Charts) index fell 3.7 percent.
Homebuilders slipped too, sending the Dow Jones Home Construction (down $34.97 to $926.96, Research) index down by 3.6 percent. Adding to the weakness in the sector was a morning report showing the pace of existing home sales slowed more than expected in October.
Dow component Merck (down $1.42 to $29.56, Research) lost 4.6 percent after announcing that as part of a cost-saving plan, it is cutting 11 percent of its workforce and closing or selling five plants. (Full story)
Helping to limit the Dow's declines: strength in McDonald's (up $0.49 to $33.95, Research), General Motors (up $0.36 to $23.22, Research) and SBC Communications (up $0.31 to $25.08, Research).
Investors also kept an eye on reports about the key holiday shopping period.
Reports from retailers and the National Retail Federation suggests a strong start to the season, which unofficially kicked off Friday, the day after Thanksgiving. Consumers are expected to continue their shopping frenzy online today, on what analysts are calling Cyber Monday.
Whether the strong early pace of buying will continue remains to be seen. (Full story)
Both retailers and Internet e-tailers slipped.
Yahoo! (down $1.02 to $41.11, Research) lost 2.4 percent after both S&P and Legg Mason downgraded the stock on concerns about valuation.
The Goldman Sachs Internet (down 3.77 to 207.32, Charts) index lost 1.8 percent.
Also weighing on the Nasdaq: declines in chips and biotech.
The Philadelphia Semiconductor (down 5.85 to 478.76, Charts) index, or the SOX, lost 1.2 percent and the Amex Biotechnology (down 12.89 to 671.53, Charts) index lost 1.9 percent.
U.S. light crude oil for January delivery fell $1.35 to settle at $57.36 a barrel on the New York Mercantile Exchange.
Treasury prices gained, lowering the yield on the 10-year note to 4.40 percent from 4.43 percent Friday. Treasury prices and yields move in opposite directions.
The dollar slumped versus the euro and yen.
COMEX gold rose $6.20 to settle at $502.60 an ounce, gaining with other dollar-traded commodities.
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