The Dow Jones industrial average was off 75.37 points, or 0.70%, to 10,766.23. The broader Standard & Poor's 500 index was off 7.77 points, or 0.64%, to 1,203.60. The Nasdaq composite index eased 13.68 points, or 0.66%, moving to 2,051.72.
Looking ahead, investors will tune in on Tuesday to a key report on manufacturing activity in February. The Institute of Supply Management's gauge is seen rising to a reading of 57 in the month from 56.4 in January. Any reading above 50 is considered expansion. Meantime, construction spending in January is expected to show an increase of 0.2% vs. 1.1% in the previous month.
On the earnings front, among the companies due to report results on Tuesday include insurer Progressive (PGR
) and financial services outfit Marsh & McLennan (MMC
On Monday, stocks were led lower in part by drug issues. Biogen Idec (BIIB
) and Elan (ELN
) said they were withdrawing their Tysabri multiple sclerosis drug from the market after a patient taking the drug died.
Auto markers were also a drag. Banc of America cut its ratings on carmakers Ford (F
) and General Motors (GM
) to sell from neutral, saying it was worried about continued market share losses.
Also pressuring stocks: oil futures rose to near $52 a barrel from Friday's close of $51.49 on concerns about cold weather in the U.S. Northeast and continued worry over an OPEC output cut. U.S. weather forecasts call for more cold weather this week, with snowfall through Wednesday. On Monday, OPEC President al Sabah said he would not recommend a cut and that he did not feel the need for any action ahead of the cartel's Mar. 16 meeting.
Meantime, economics news was mixed. A gauge of regional manufacturing activity, the Chicago Purchasing Managers Index, was firmer than expected in February, with the headline index at 62.7 vs. a prior 62.4 and expectations centered on 60.
But new homes sales figures for January were weak, down 9.2% to 1.106 million annualized units, which compares to forecasts slated in the 1.100-1.125 million range. The figure compares to 1.218 million in December.
Merger news may have been keeping the market from bigger losses. Department store operator Federated Department Stores (FD
) said it would buy rival May Department Stores (MAY
) in a $17 billion deal, including assumption of May's debt.
Meanwhile, trucking concern USF (USF
) agrees to be acquired by Yellow Roadway (YELL
) in a deal valued
at approximately $1.47 billion, including debt assumption.
A Wall Street Journal report said that Qwest Communications (Q
) is willing to revise its latest stock-and-cash offer for MCI (MCIP
), but only if MCI indicates it is willing to engage in discussion with Qwest.
Mylan Laboratories (MYL
) and King Pharmaceuticals (KG
) scrapped their $3.8 billion merger plans.
Earnings news Monday was mixed. Food outfit H.J. Heinz (HNZ
), maker of the ketchup with the same name, said its quarterly earnings fell.
Jeweler Tiffany (TIF
) reported quarterly earnings rose thanks to a gain from selling its stake in Aber Diamond.
In other economics news, personal income fell by a less than expected 2.3%, while spending was flat, as expected. The wage and salary component of income (which is not distorted by the noise of dividend payments) rose 0.6% in January following a 0.5% rise in December. These are some of the best pay-for-work gains in quite some time, Informa Global Markets says. But on a worrisome note, core consumer prices rose 0.3% -- the fastest rate in more than three years.
Treasuries finished lower in price Monday with the yield on the 10-year note rising to 4.37%. The market weakened after personal income and spending data, says Informa Global Markets.
European stock markets closed mixed on Monday. In London, the Financial Times-Stock Exchange 100 was off 38.30 points, or 0.76%, to 4,968.50 as HSBC's results weighed on the market. The financial-services giant fell after posting a 37% rise in profits to US $17.608 billion, lower than analysts were expecting. Publisher Pearson also drops after reporting slightly below forecasts. The company says weakness at its Penguin division and the weak dollar hit profits.
Germany's DAX index rose 1.85 points, or 0.04%, to 4,350.49 early trade reported as reasonably brisk. Among stocks on the move today, MAN paced stocks higher after Die Welt reported the company may close two German plants affecting 700 jobs. Analysts forecast the restructuring could cost the company some 50 million to 80 million euros in operating profit with a payback period of 1.5 years.
In Paris, the CAC 40 index went off 7.41 points, or 0.18%, to 4,027.16. French stocks were generally higher after a good close in the U.S. on Friday and good macro data from France this morning. French consumer confidence unexpectedly increased to -23 in February vs. -25 in January, providing uplift to retailer Carrefour. France Telecom underperformed as investors remained concerned about debt levels.
Asian markets closed higher on Monday. Japan's Nikkei-225 index rose 82.35 points, or 0.71%, to close at 11,740.60, an eight-month high, lifted by Friday's gains on Wall Street and on strong output data released just before the start of trade. Trade ministry data showed industrial production rose 2.1% month over month in January, higher than market expectations. Steel makers gained with Tokyo Steel, Nippon Steel and JFE Holdings up 3.8%, 3.6% and 4.2%, respectively.
In Hong Kong, the Hang Seng Index rose 38.26 points, or 0.27%, to 14,195.35. Oil players such as Sinopec and Petrochina gained strength due to higher world crude prices, which held above US$51 per barrel.