U.S. stocks drop, led by selloff in Intel, tech
NEW YORK (MarketWatch) -- U.S. stocks ended near their session lows Monday, weighed by a selloff in tech stocks, and as investors took a cautious stance before the Federal Reserve's policy decision later this week.
The Dow Jones Industrial Average (DJIA) shed 52.35 points, or 0.4%, to 13,254.29. It lost about 35 points in the last half-hour of trading.
The S&P 500 index (SPX) fell 8.84 points, or 0.6%, to 1,429.08, with technology the worst performer and telecommunications the only gainer among its 10 major sectors.
"We're waiting for a lot of catalysts that will happen this week but not today," said Art Hogan, market strategist at Lazard Capital Markets.
"I'm still nervous that the market is expecting more than it may get from the Fed. The Street seems to think it's a lock that we see QE3. I hope the market hasn't set up too much and then gets disappointed," he added.
Hogan highlighted a pullback in tech stocks for the late-day retreat.
Also near the closing bell, Spain's Prime Minister Mariano Rajoy was quoted as saying he hadn't decided whether the country should request European Central Bank aid. Spain's debt burden has been one worry for U.S. investors this year, reaching a peak in July.
Decliners outstripped advancers on the New York Stock Exchange, where 616 million shares traded. NYSE composite volume was about 3.2 billion.
The U.S. dollar (DXY) tilted higher against other global currencies, including the euro (EURUSD) . Treasury prices veered between gains and losses, with the 10-year note yield (10_YEAR) recently trading at 1.66%. Read more on bonds.
Analysts questioned the need for a third round of easing, or QE3, by the Federal Reserve, but agree the market is pricing in the move, with stocks hitting multiyear highs Friday after August payrolls rose by just 96,000.
"I'm still in the camp of: Do we really need to? The economic data in general are better than expected, so I don't see the pressing need for additional easing at this point," said Paul Nolte, managing director at Dearborn Partners.
"That being said, odds are favoring [Federal Reserve Chairman Ben] Bernanke doing some sort of easing. The Fed is focused on jobs and the fact that inflation is low at this point gives them the opportunity to continue very easy monetary policy," Nolte added.
But some analysts believe the Fed will not resort to further monetary easing until later in the year, when the threatened fiscal cliff is more imminent.
"We need fiscal policy and not monetary policy," said Nolte, echoing Bernanke's repeated call to lawmakers to act.
The Congressional Budget Office estimates that if Congress fails to reach a deficit-reduction agreement and prevent more than $600 billion in automatic spending cuts and tax hikes set to be implemented in January, another recession is likely.
"In 2011, Washington took us right to the edge of the cliff before they raised the debt ceiling. Why would one expect it to be different this time? That's all I have to say about that," emailed Elliot Spar, market strategist at Stifel Nicolaus.
The Fed is more likely to take less dramatic steps in the short term, such as extending guidance for keeping interest rates at exceptionally low levels into 2015, said Lazard's Hogan.
"Also lost in the shuffle is their ability to take down the interest rates on excess reserves from 25 basis points to zero," said Hogan of another possible policy option for the FOMC.
A German court is expected to rule Wednesday on the nation's participation in the European Stability Mechanism, the permanent euro-area rescue fund. See: Germany's top court to decide rescue fund's fate.
A report released Sunday by China's National Bureau of Statistics said imports into the country fell 2.6% in August from the year-ago period. Exports climbed 2.7%, less than expected. Read more on China trade surplus.