Stocks retreat after rallyWall Street slumps after last week's advance, as investors mull downgrades of credit card issuers; Microsoft's move for Yahoo in focus.Video
NEW YORK (CNNMoney.com) -- Stocks pulled back early Monday after last week's big rally, amid analyst downgrades of the financial sector and ongoing concerns about the strength of the economy. The Dow Jones industrial average (INDU), the broader Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all declined in the first hour of trading. Stocks rallied at the end of last week, after a miserable January, as investors welcomed Microsoft's bid for Yahoo and more talk of a bailout for the troubled bond insurers. Last week the Dow gained 4.4% and the S&P 500 jumped 4.9%. The Nasdaq advanced 3.8%. After such a big run, stocks were vulnerable Monday, particularly with little new economic or corporate news to focus on. UBS downgraded American Express (AXP, Fortune 500) to "sell" from "buy." The bank also cut its ratings on Discovery Financial (DFS) and Capital One Financial (COF, Fortune 500) to "sell" from "hold," Briefing.com reported. The downgrades reflected the firm's forecast for a consumer-led recession in the first six months of this year, which would weigh on the credit card issuers. Microsoft (MSFT, Fortune 500)'s proposed $45 billion takeover of Yahoo (YHOO, Fortune 500) remains in the spotlight and is facing challenges from Google (GOOG, Fortune 500). Google publicly criticized the unsolicited bid over the weekend, and the company's chief executive called Yahoo's CEO to offer help in fending off Microsoft, possibly through a partnership, according to published reports. In economic news, the December factory orders index rose more than expected. Orders rose 2.3%, the government reported, topping forecasts for a rise of 2%. Orders rose 1.7% in November. Other markets. Treasury prices fell, raising the yield on the benchmark 10-year note to 3.65% from 3.58% late Friday. Bond prices and yields move in opposite directions. In currency trading, the dollar gained versus the yen and fell against the euro. U.S. light crude oil for March delivery rose 9 cents to $89.05 a barrel on the New York Mercantile Exchange. COMEX gold for April delivery fell $14.50 to $899 an ounce. |
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