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S&P 500 retreats to start year lower for first time since 2008

Investors used the first day of trading in 2014 to rebalance their stock portfolios, posting declines Thursday.

The Dow Jones Industrial Average fell 135.31 points to 16,441.35 after gaining 26.5 percent in the previous year. The Nasdaq composite index, up 38 percent last year, dropped 33.52 points to 4,143.07. The Standard & Poor’s 500 Index started the year lower for the first time since 2008 and was down 16.38 points to 1,831.98 after gaining 29 percent in 2013.

The Department of Labor reported initial claims for jobless benefits fell 2,000 last week to 339,000.

Oil prices fell sharply on Thursday, down $2.98 to $95.44 a barrel. However, gold rose $22.90 to $1,225.20 an ounce.

Apple Inc. (Nasdaq: AAPL) fell 1.4 percent after Wells Fargo & Co. (NYSE: WFC) cut its rating on the stock, sending technology shares lower by 1.1 percent as a group.

Analog Devices Inc. (Nasdaq: ADI) lost 3.2 percent after Goldman Sachs Group Inc. (NYSE: GS) advised investors to sell the shares.

Newmont Mining Corp. (NYSE: NEM) added 4 percent as gold futures rose the most in three weeks in New York.

About 6 billion shares changed hands on U.S. exchanges, in line with the three-month average.

Monday’s decline on the S&P 500 snapped a streak of five straight gains on the first trading session of January. The index had risen an average of almost 2 percent that day since 2009, according to data compiled by Bloomberg.

Equity returns will slow this year, Wall Street strategists forecast. The S&P 500 will end 2014 at 1,950, according to the average of 20 estimates compiled by Bloomberg. That represents a 5.5 percent gain from the end of 2013.

Analysts are predicting 116 stocks in the index will see price declines this year, according to average year-end targets compiled by Bloomberg. That’s the greatest number of bearish forecasts for the S&P 500 in nine years, the data show.

The average company in the index is estimated to rise 4.8 percent this year, according to the data. That’s the least optimistic forecast since Dec. 31, 2004, when the average was 4.7 percent.

Alcoa Inc. (NYSE: AA) and Harris Corp. (NYSE: HRS) are among the companies projected to fall the most this year.

Analysts estimate earnings for S&P 500 companies in the fourth quarter grew by 5.2 percent, according to data compiled by Bloomberg. Alcoa will unofficially begin the reporting season when it discloses results after the markets close on Jan. 9.

Three rounds of Federal Reserve stimulus and better-than-forecast corporate earnings have helped the S&P rally as much as 173 percent from a 12-year low in 2009. The Fed announced plans in December to reduce the pace of bond buying amid faster-than-estimated economic growth.

Data Monday indicated applications for U.S. unemployment benefits declined last week to the lowest level in a month. Jobless claims fell by 2,000 to 339,000 in the period ended Dec. 28, Labor Department data showed. The median forecast of 26 economists surveyed by Bloomberg called for 344,000 claims.

A separate report showed the Institute for Supply Management’s factory index fell to 57 in December from the prior month’s 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.

Reports from Europe Monday confirmed factory output in the euro area expanded last month at the fastest pace since May 2011 as Italy’s manufacturing beat estimates and Germany production grew for the sixth month. Data showed China’s official Purchasing Managers’ Index slipped to a four-month low in December, while a private report also signaled manufacturing grew at a slower pace.

American consumers in 2013 were more upbeat than at any time in the previous six years as views on the economy, finances and the buying climate improved. The Bloomberg Consumer Comfort Index averaged minus 31.4 for 2013, the highest since 2007, when it was minus 10.5.

All 10 main S&P 500 groups retreated at least 0.5 percent Monday, with utility and energy shares dropping at least 1.3 percent for the biggest declines. Exxon Mobil Corp. (NYSE: XOM) slid 1.4 percent to $99.75.

Apple sank 1.4 percent to $553.13, leading an index of technology-hardware stocks to a 1.4 percent decline. Wells Fargo analyst Maynard Um cut the rating on the stock to "market perform" from "outperform," saying the iPhone maker’s gross margin could come under pressure later in the year.

Analog Devices fell 3.2 percent to $49.28. Goldman Sachs analyst James Covello cut the circuit maker from "sell" from "neutral" and lowered the stock’s price target to $41 a share.

Range Resources Corp. (NYSE: RRC) dropped 3.1 percent, the most since October, to $81.74 after the company said in a filing that CEO John Pinkerton retired on Dec. 31.

Newmont Mining increased 4 percent to $23.96. Gold for February delivery settled 1.9 percent higher in New York after the metal posted its largest annual decline in three decades. Newmont fell 50 percent last year for the biggest decline in the S&P 500.

Urban Outfitters Inc. (Nasdaq: URBN) jumped 1.8 percent to $37.78. Urban Outfitters dropped 5.7 percent last year, making it the only consumer discretionary stock in the S&P 500 to decline.

American Eagle Outfitters Inc. (NYSE: AEO) rose 2.3 percent to $14.73.

-- Bloomberg News contributed to this report.

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