Techs drag on Wall Street

Investors retreat ahead of economic reports; automaker shares jump on Daimler's majority sale of its Chrysler unit.

By Alexandra Twin, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Tech and financial stocks slumped Monday, dragging down the Nasdaq composite and limiting gains for the Dow industrials as investors backed off after the recent rally.

The tech-fueled Nasdaq composite (down 15.78 to 2,546.44, Charts) lost 0.6 percent. The Dow Jones industrial average (up 20.56 to 13,346.78, Charts) added a few points, briefly hitting an intraday record of 13,383.76 earlier in the session before retreating. The broader S&P 500 index (down 2.70 to 1,503.15, Charts) lost 0.2 percent.

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Treasury prices dipped, raising the corresponding yields. The dollar fell versus the euro and rose versus the yen. Oil prices rose and gold prices fell.

Stocks rose Friday after a mild reading on inflation raised bets that the Federal Reserve might cut interest rates later in the year.

But the tone was less upbeat Monday, as investors welcomed the majority sale of Chrysler to a private equity firm, but hesitated ahead of a slew of economic reports. Tuesday's Consumer Price Index (CPI) and its inflation-tracking component, the core CPI, kick off a busy week that includes readings on manufacturing, housing, leading economic indicators (LEI) and consumer sentiment.

CPI is likely to set the tone for the week, said Joseph Saluzzi, co-head of equity trading at Themis Trading.

The way the market has been over the last month, investors are looking to each economic number to "confirm or refute the perspective on the economy" and on what the Federal Reserve might do in terms of interest rates, Saluzzi said. With the way the current sentiment is, he said a pretty mild reading on consumer prices tomorrow would be desirable to stock investors, as it would raise hopes that the central bank might cut rates later this year.

Stocks were also a little vulnerable after the recent advance, which sent the Dow industrials to an all-time high and lifted the S&P 500 and Nasdaq to more than 6-year highs.

"The market is showing signs of fatigue and needs a new strong catalyst," said Peter Cardillo, chief market economist at Avalon Partners.

He said that the economic news later in the week could provide that catalyst, one way or the other.

"If we see higher inflation at the consumer level or the LEI indicating slower economic growth, or especially weak housing numbers, those could be big catalysts to the downside," Cardillo said. Alternately, supportive reports could help move stocks higher, he said.

Stocks surged between early March and early May, bouncing back after a late-February drubbing sparked by worries about a global growth slowdown. In the latest stretch of the run, the Dow industrials rose for 24 out of 27 sessions, matching the longest up streak in nearly 80 years. The advance also sent the S&P 500 to within 15 points of an all-time high hit in March 2000.

DaimlerChrysler said it will sell an 80 percent stake in Chrysler, its U.S. auto unit, for $7.4 billion to private equity firm Cerberus Capital Management. DaimlerChrysler (up $2.12 to $84.12, Charts) shares gained 2.6 percent.

Shares of automaker rivals Ford Motor (up $0.34 to $8.71, Charts, Fortune 500) and General Motors (up $1.16 to $30.62, Charts, Fortune 500) jumped in tandem.

Bear Stearns boosted its rating on GM, Reuters reported, saying that the Chrysler sale was beneficial to both GM and Ford. In addition, reports said that the Ford family was considering selling its controlling stake in the automaker. However, the family denied the reports.

In other deals news, Mylan Labs (down $2.70 to $19.70, Charts) said it will buy German drugmaker Merck KGaA's generic drug unit for $6.7 billion. Mylan shares slumped on the news.

Cardinal Health (up $0.12 to $69.19, Charts, Fortune 500) said it will buy Viasys Healthcare (up $11.63 to $43.18, Charts) for about $1.5 billion in cash and debt.

Nokia (up $0.89 to $25.96, Charts) shares gained after the telecom boosted its market share forecast for the second quarter.

Applied Materials (up $0.71 to $20.48, Charts, Fortune 500) gained 3.5 percent in active trade, rising ahead of its quarterly earnings release, expected Tuesday evening.

Yahoo (down $0.74 to $29.31, Charts, Fortune 500), Dell (down $0.54 to $25.27, Charts, Fortune 500), Qualcomm (down $0.61 to $44.25, Charts, Fortune 500) and Cisco Systems (down $0.34 to $26.29, Charts, Fortune 500) were among the heavily-traded tech shares dragging on the Nasdaq.

Other decliners were in the financial, gold, silver and homebuilding sectors.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.15 billion shares. On the Nasdaq, decliners topped advancers 2 to 1 on volume of 1.68 billion shares.

U.S. light crude oil for June delivery rose 9 cents to settle at $62.46 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $2.20 to settle at $670.10 an ounce.

Treasury prices slipped, lifting the yield on the 10-year note to 4.69 percent from 4.67 percent, roughly where it stood late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped against the euro and rose against the yen. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.