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Stocks fall as investors await start of earnings season

Stock prices trended lower Monday as investors cashed in on the large gains in the previous week.

The Dow Jones Industrial Average, up 497 points last week, fell 50.92 points to 13,384.29. The Nasdaq Composite Index was down 2.85 points to 3,098.81, and the S&P 500 Stock Index declined 4.58 points to 1,461.89.

Shares of San Diego-based Illumina Inc. (Nasdaq: ILMN) fell $3.87 to $50.90 after Swiss drugmaker Roche Holdings announced it had no plans to make a new offer to acquire the company.

Commodity prices were little changed on Monday. Gold fell for the third consecutive session, down $2.60 to $1,646.30 an ounce. Oil gained 10 cents to $93.19 a barrel.

The S&P 500 ended last week at the highest level since 2007 after data showed employers added workers in December at about the same pace as the prior month. The gauge rallied 2.5 percent on Wednesday after Republicans and Democrats agreed on a compromise budget that avoided the so-called fiscal cliff of sweeping tax increases and spending cuts.

Alcoa Inc. (NYSE: AA) will unofficially start the earnings reporting season after the market closes Tuesday. Fourth-quarter profits at S&P 500 companies grew an average 2.9 percent, according to data compiled by Bloomberg. Excluding financial companies, earnings increased 0.5 percent.

Eight out of 10 groups in the S&P 500 retreated Monday as utility and energy companies had the biggest losses, dropping at least 0.8 percent. Telephone and health care providers advanced more than 0.3 percent.

Boeing Co. (NYSE: BA) declined 2 percent to $76.13. The company’s all-new model, which has a fuselage made of composite materials instead of aluminum and has more electric-operated systems than earlier models, has been plagued by incidents since the first plane was delivered to an airline at the end of 2011.

Applied Materials Inc. (Nasdaq: AMAT) dropped 1.2 percent to $11.67. The stock was downgraded to "underweight" from "neutral" at JPMorgan Chase & Co. (NYSE: JPM) by analyst Christopher Blansett. The share-price estimate is $10.

Yahoo! Inc. (Nasdaq: YHOO) declined 2.3 percent to $19.40. The biggest U.S. Web portal was cut to market perform from outperform at Sanford C. Bernstein & Co.

Archer-Daniels-Midland Co. (NYSE: ADM) retreated 4.1 percent to $28.01. The world’s largest corn processor was rated underweight in new coverage at JPMorgan by equity analyst Ann Duignan. The share- price estimate is $28.

Apple Inc. (Nasdaq: AAPL) lost 0.6 percent to $523.90 after Barclays Plc (NYSE: BCS) slashed its share-price estimate for the world’s most valuable company to $740 from $800.

Amazon.com Inc. (Nasdaq: AMZN) rallied 3.6 percent to $268.46. Worldwide e- commerce sales will reach $1 trillion by 2016, up from $512 billion last year, Scott Devitt, an analyst at Morgan Stanley (NYSE: MS), projected in a Jan. 6 research report. By then, Amazon’s market share will be 23.5 percent, helping net sales reach $166 billion, Devitt predicted, higher than his prior projection for sales of $145 billion and a 20.6 percent share.

Walgreen Co. (NYSE: WAG) rose 2.3 percent to $38.03. The largest U.S. drugstore chain was raised to buy from hold at Jefferies Group Inc. (NYSE: JEF) by equity analyst Scott Mushkin. The 12-month share-price estimate is $47.

Nationstar Mortgage Holdings Inc. (NYSE: NSM) jumped 17 percent to $38.83 after saying it will acquire $215 billion in residential mortgage servicing rights from Bank of America (NYSE: BAC).

Speculators are abandoning money-losing bets that stocks with the closest links to the U.S. economy will fall as America’s most-hated shares stage the best rally in a year relative to the broader market.

The 20 stocks with the highest short sales in the S&P 500 rose an average of 5.1 percent in December, compared with 0.7 percent for the full gauge, according to data compiled by Bloomberg. The performance gap is the widest since January 2012. Companies from U.S. Steel Corp. (NYSE: X) to J.C. Penney Co. (NYSE: JCP) are gaining at the expense of phone companies and utilities, which usually do best when the economy contracts.

Bloomberg News contributed to this report.

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