Stocks Fall After Dow's Record High

NEW YORK -- Wall Street retreated Monday after nudging the Dow Jones industrials to a new trading high, as investors cashed in some profits on the last trading day of April — which is poised to be the Dow's best month since October 2002.

The blue-chip index has risen about 760 points this month and is now up more than 6 percent on the year, thanks in large part to first-quarter earnings that have come in better than analysts had forecast.

On Monday, investors were a bit disappointed by the Commerce Department's report that personal spending increased only 0.3 percent. Still, they were pleased to see that core inflation as measured by personal consumption spending is up 2.1 percent for the past 12 months — lower than the 2.4 percent rise recorded for the 12 months ending in February. Investors are hoping for a rate cut from the Federal Reserve by the end of the year, which could fuel consumer spending.

Also staving off a selloff, Verizon Communications, Kellogg Co. and RadioShack Corp. reported earnings that were stronger than anticipated.

In midafternoon trading, the Dow Jones industrial average slipped 1.46, or 0.01 percent, to 13,119.48. Earlier, it climbed as high as 13,162.06. The Dow on Friday hit its 37th record close for the index since October.

Story Continues Below

Broader stock indicators were mixed, with investors tending toward larger, more established companies due to signs of a cooling economy.

The Standard & Poor's 500 index fell 4.47, or 0.30 percent, to 1,489.60.

The Nasdaq composite index slipped 18.95, or 0.74 percent, to 2,538.26.

Bonds jumped; the yield on the benchmark 10-year Treasury note fell to 4.64 percent from 4.70 percent late Friday.

Gold prices rose, and the dollar fell. The U.S. currency is at all-time lows against the euro and 26-year lows versus the British pound.

Most financial reports Monday continued to show corporate growth was slower than in recent quarters but stronger than analysts expected — that has allowed price-to-earnings ratios to rise, suggesting that stocks have the potential to climb higher.

Jeffrey Kleintop, chief market strategist at LPL Financial Services, said mutual funds statistics show that just last week, individual investors began putting money into the market after several weeks of taking it out, but that surveys show only moderate levels of investor enthusiasm. "There's not a lot of overconfidence baked into the market yet."

Verizon, one of the 30 Dow stocks, reported that its first-quarter profit fell 8.4 percent, but revenue rose 17 percent and the results beat predictions. Verizon rose 52 cents to $38.41.

RadioShack Corp.'s first-quarter earnings jumped as costs fell, and the results topped analyst expectations. The electronics retailer rose $1.84, or 6.6 percent, to $29.56.

Humana Inc. posted a 15 percent decline in its first-quarter profit from a year earlier, which benefited from a gain. The health insurer's results beat Wall Street's expectations, but the stock fell $1.66, or 2.5 percent, to $63.27.

Kellogg Co. said its first-quarter earnings rose 17 percent, and raised its outlook for the full year. The cereal maker rose 47 cents to $53.55.

Fresh takeover activity also buoyed stocks: German stock exchange operator Deutsche Boerse AG confirmed it has agreed to buy the U.S. options exchange International Securities Exchange Holdings for $2.8 billion in cash. ISE surged $21.53, or 47 percent, to $67.23.

"What's giving the market an upward tilt through this is that corporate earnings have exceeded revised expectations," said Alan Gayle, senior investment strategist at Trusco Capital Management. "That has combined with the increased M&A activity, and it's given the market something to get excited about."

In addition to personal spending and inflation, the Commerce Department reported Monday that construction spending edged up 0.2 percent, dampened by housing activity, which decreased for the 11th month out of the past 12.

Also, the National Association of Purchasing Management-Chicago said its index of manufacturing activity was 52.9 in April, below the average estimate and down from a reading of 61.7 in March — its highest level in two years. A reading above 50 in the index indicates growth in Midwest manufacturing, while a reading below 50 suggests contraction. The index is seen as a precursor of the national assessment by the Institute for Supply Management, which will be released Tuesday.

Light, sweet crude fell 81 cents to $65.65 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 11.18, or 1.35 percent, to 818.52.

Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to 1.15 billion shares.

Overseas, Japanese markets were closed for a holiday. Britain's FTSE 100 rose 0.48 percent, Germany's DAX index rose 0.42 percent and France's CAC-40 rose 0.49 percent.

Most Asian markets fell Monday as investors worried China may ramp up efforts to slow its booming economy after announcing new credit tightening measures. But Chinese markets hit record highs, driven by strong corporate earnings.

Editor's note:
Big Gains as Stocks Go Up ... Or Down! -- Find Out How
1200% Gains in 42 Days -- Find Out How
These 3 Stocks Will Be The Biggest Winners When 77 Million Baby Boomers Retire