RTRS: US STOCKS-Wall St reverses recent sharp gains
U.S. stocks fell on Monday as investors took profits on strong gains racked up in thin trading last week and shares of the largest telecommunications companies sank on worries about slowing cellphone sales.
Stocks had closed out a holiday-shortened week with a more than 6 percent gain as investors bet a recovery is on the horizon after their worst year since the Great Depression.
U.S. President-elect Barack Obama, seeking to drum up support from both political parties, plans to propose up to $310 billion in tax cuts as part of a massive stimulus package, senior Democratic aides said on Sunday. For details see [ID:nN04350872].
"Right now we're just watching and waiting to see if there is any news from the new administration and what type of news it will be," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "We got a little bit of profit taking here," he added.
Telecom shares were among the worst performers after Bernstein Research cut its ratings and price targets for AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) and Verizon Communications (VZ.N: Quote, Profile, Research, Stock Buzz) [RCH/US], citing concerns about cellphone sales. Verizon shares fell 5.3 percent and AT&T sank 3.5 percent.
Transportation stocks also fared poorly after truck and engine maker Navistar International (NAV.N: Quote, Profile, Research, Stock Buzz) forecast it would earn less that Wall Street expected in its 2009 fiscal year. The Dow Jones Transportation index .DJT fell 1.2 percent and Navistar fell 2.2 percent.
The Dow Jones industrial average .DJI fell 86.02 points, or 0.95 percent, at 8,948.67 and the Standard & Poor's 500 Index .SPX lost 8.57 points, or 0.92 percent, at 923.23. The Nasdaq Composite Index .IXIC stumbled 23.79 points, or 1.46 percent, at 1,608.42.
"Part of what we are seeing ... is searching around for rationalization and not finding one necessarily," said Arthur Hogan, chief market analyst with Jefferies & Co in Boston.
Hogan said that given that last week's gains came amid low volume, they may be difficult to sustain.
In company news, Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) chief executive Steve Jobs wrote a letter aimed at dispelling investor concerns about his recent weight loss, pushing shares of the iPod maker up 3.1 percent to $93.56 in early trading.
On Friday, the S&P closed 45 points above its 50-day moving average, the greatest margin it has been over that widely watched measure since May 20, 2008 and the third day in a row it closed above the 50-day moving average in its longest streak since early September, before Lehman Brothers' collapse.
On the U.S. data front, U.S. construction spending fell a slim 0.6 percent in November, showing that building at the end of 2008 was stronger than Wall Street had expected.
Investors also braced for monthly vehicle sales, seeking insight on the outlook for the embattled economy, but the week's big piece of macroeconomic data -- December U.S. nonfarm payrolls -- will come on Friday. (Editing by James Dalgleish)
