1-6-14 4:25 PM EST | Email Article
 

By Anora Mahmudova, MarketWatch

 

NEW YORK (MarketWatch) -- U.S. stocks closed lower on Monday, with the S&P 500 index falling for a third consecutive session after weaker-than-expected services-sector data.

 

The Dow Jones Industrial Average (DJI) fell 44.89 points, or 0.3%, to 16,425.10.

 

The S&P 500 (SPX) dropped 4.60 points, or 0.3%, to 1,826.77, and the Nasdaq Composite (RIXF) lost 18.23 points, or 0.4%, to 4,113.68. For both indexes, it was the third straight day of losses.

 

"After the superb gains in 2013, a modest pullback in the S&P 500 is both warranted and understandable," said Terry Sandven, senior equity strategist at U.S. Bank Wealth Management.

 

"If there is a pullback, it is likely to get to the 50-day moving-average level, which is a 2% or 2.5% drop from current levels, before we see buyers move back in," Sandven said.

 

"However, we think the environment is favorable for equities in 2014, as the economy continues to improve, valuations are not extreme and inflation, which is the key driver, is benign," he added.

 

The Institute for Supply Management said Monday its services index for December decelerated to 53% from 53.9% in November. While the number still indicates expansion, it lagged the 55% expected by economists polled by MarketWatch. In a separate report, orders for goods produced in U.S. factories jumped 1.8% in November, beating expectations of a 1.6% rise. The increase, led by orders for durable goods, suggests the manufacturing sector enjoyed stronger growth than the services side of the economy toward the end of last year.

 

Last week, the ISM manufacturing data showed that the increase in new orders last month was the largest in more than two-and-a-half years, while manufacturing employment accelerated.

 

The overall improving economy, along with the falling unemployment rate and an improving housing market, has prompted the Federal Reserve to begin tapering its monthly asset-buying program by $10 billion to $75 billion a month. The U.S. Senate is expected to confirm Janet Yellen, currently the Fed's vice chair, as the new Fed chief in a vote on Monday.

 

In corporate news:

 

* Boeing Co. rose 0.6% to close at $138.41. Late Friday, Boeing's largest union voted to accept a new contract that will keep manufacturing for the planned 777X and its wings in Washington state. Analysts at Bernstein Research reiterated the stock's outperform rating and raised the target price to $165 from $156, noting that under the terms of the new agreement there will be no strikes for the next ten years.

 

* Shares in SolarCity Corp. soared 7.2% after analysts at Goldman Sachs upgraded the stock to buy. The analysts also downgraded First Solar Inc. from buy to sell, sending the shares down 9.7%. The sliding of the stock the restrictions for short sales at 10:48 a.m., according to an alert sent out by Nasdaq OMX.

 

* Twitter Inc. shares dropped 3.9% after Morgan Stanley cut the social media company to underweight from equalweight, with a price target of $33. "As competition for online ad dollars intensifies, we guide investors to Google and Facebook, dominant platforms with more attractive risk/reward," analyst Scott Devitt wrote.

 

* Sirius XM Holdings Inc. shares soared late on Friday and rose 7.3% on Monday after Liberty Media offered to buy the satellite radio company in a stock swap that would value the company at $3.68 a share. Liberty already holds a 52% stake in Sirius.

 

* Shares in Apple Inc. recovered from earlier losses and closed 0.6% higher, after losing 2.2% on Friday in the wake of a rating downgrade.

 

* The battle among men's clothing retailers continued Monday, as Men's Wearhouse Inc. said it began a cash tender offer worth roughly $1.6 billion, in which it would buy Jos. A. Bank Clothiers Inc. shares from current holders at $57.50 a piece. The two clothiers have been exchanging buyout offers for months. Jos. A. Bank shares rose 4.5% and Men's Wearhouse ended up 2.2%.

 

In other markets:

 

* Asian stocks ended lower after a rising yen hit Japanese equities and concerns over new listings weighed on Chinese stocks. Europe stocks also closed lower.

 

Read more on MarketWatch:

 

ISM services index steady, aside from orders drop

 

CES, bitcoin in Farmville and how to make drinking sewage pay off

 

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


(END) Dow Jones Newswires

January 06, 2014 16:25 ET (21:25 GMT)

Copyright (c) 2014 Dow Jones & Company, Inc.
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