U.S. Stocks Fall as Tech Shares Weigh
02/04/2013| 06:36am US/Eastern
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--Major benchmarks slump on concerns about Europe
--Dow posts first triple-digit point decline in 2013
--Technology stocks weigh on major benchmarks
NEW YORK--The Dow Jones Industrial Average posted its first triple-digit drop this year on Monday, as weakness in technology stocks helped derail a five-week rally for the blue chips.
The Dow sank 129.71 points, or 0.9%, to 13880.08, its biggest daily slide since Dec. 28. Monday's decline followed the Dow closing above 14000 for the first time since October 2007 on Friday and trimmed the benchmark's advance so far this year to 5.9%.
"What we're dealing with is that we've had quite a run higher, and it follows that it's time to digest some of those gains," said Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel.
The Standard & Poor's 500-stock index lost 17.46 points, or 1.2%, to 1495.71. All 10 S&P 500 sectors lost ground, with particular weakness in technology shares. Oracle dropped 3% after agreeing to buy Acme Packet, which makes telecommunications equipment, in a deal valued at $1.7 billion.
The technology-oriented Nasdaq Composite Index fell 47.93 points, or 1.5%, to 3131.17. Facebook eased 5.4%, continuing a slide that began last week, after its shares hit their highest level since July.
Broad declines in the U.S. followed those in Europe, where the Stoxx Europe 600 shed 1.5%. Spanish and Italian bond yields rose, and stocks from those countries declined sharply on concerns about political graft and Italy's banking sector.
Spain's IBEX 35 index slid 3.8%, while Italy's FTSE MIB slumped 4.5%. Spanish Prime Minister Mariano Rajoy moved to contain a scandal over alleged cash payments to him. In Italy, weakness in bank stocks was compounded by a criminal investigation into derivatives trading.
"In the short run, a lot of the people who were ready-and-willing to buy stocks have already done so," said Bill Stone, chief investment strategist at PNC Asset Management Group. "And, in the backdrop today, the market is revisiting the jitters in Europe."
Asian markets were mostly higher after data released over the weekend showed a continued expansion in China's services sector in January. China's Shanghai Composite rose 0.4% and Japan's Nikkei Stock Average gained 0.6%.
In U.S. economic news, orders for manufactured goods rose in December, according to the Commerce Department, but its 1.8% increase was shy of a 2.2% rise expected by economists.
Stock-rating downgrades from analysts pressured a trio of Dow heavyweights. Drug maker Merck was among the worst performers on the Dow, falling 2.3% after analysts at Morgan Stanley cut their rating on the stock, voicing pessimism about the company's drug pipeline.
Wal-Mart Stores fell 1.2% after analysts at J.P Morgan Chase cut the retailer's stock rating to "neutral" from "overweight," noting that the recent expiration of payroll tax cuts could hamper sales growth.
Chevron fell 1.1% after analysts at UBS cut its stock recommendation, noting that the stock no longer looks cheap after gains of nearly 10% over the past 12 months.
In other corporate news, Clorox rose 0.7% after the consumer-products company reported that improved sales and price increases drove profit margins higher and issued an optimistic estimate for its full-year earnings.
McGraw-Hill led the S&P 500 lower, plunging 14% after reports that the Justice Department and state prosecutors plan to file civil charges alleging wrongdoing by the company's Standard & Poor's Ratings Services business. S&P said the potential lawsuit, involving its rating of mortgage bonds before the financial crisis erupted in 2008, was "entirely without factual or legal merit."
Shares of rival ratings firm Moody's slid 11%.
Gannett slumped 6.7% after the publisher of USA Today and other newspapers saw its quarterly earnings fall 12%. The company's print-advertising revenue continued to decline, while revenue perked up in digital subscriptions.
Health insurer Humana jumped 4.7% after posting fourth-quarter earnings that topped estimates.
Sysco declined 2.7% after the as the food-services distributor posted higher restructuring-related charges, offsetting benefits of increased sales in the most recent quarter.
Front-month March crude-oil futures fell 1.6% to $96.17 a barrel, while February gold futures rose 0.4% to settle at $1,675.30 a troy ounce. The dollar rose against the euro, but slipped against the yen. Yields on benchmark 10-year Treasury notes fell to 1.973% as demand rose.
Write to Chris Dieterich at chris.dieterich@dowjones.com and Matt Jarzemsky at matthew.jarzemsky@dowjones.com
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