Wall Street Dips After Rally, Middle East Eyed
NEW YORK (Reuters) - Stocks eased on Monday after a rally that drove the S&P 500 index to its highest level in nearly five years and investors focused on signs of weak growth and Middle East turbulence.
Stocks rode a four-day streak last week to a 1.9 percent gain, getting a charge from the Federal Reserve's new stimulus measures that could keep equities buoyed for months. The Fed's action followed a decision by the European Central Bank to support debt-ridden euro-zone nations by purchasing their debt.
"Everyone is still reeling from last week - that is part of it," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
"But on the other hand, it starts to become increasingly more difficult to pull the trigger on buy orders at these valuations."
With central banks appearing ready to make every effort to support markets, investors turned their attention to other possible headwinds, including the economy and geopolitical risks.
"The market is certainly going to start to focus on some of this geopolitical stuff that is happening over in Iran and the Middle East because there is nothing else to focus on," said Ken Polcari, managing director at ICAP Equities in New York.
"Between the Fed and the ECB throwing all this money out there, (investors) don't have to worry about the market falling out of bed," Polcari added. "They can concentrate on other parts of what else is going on in the world."
Protesters in Afghanistan and Indonesia burnt U.S. flags and chanted "Death to America" on Monday in renewed demonstrations over a film mocking the Prophet Mohammad.
Israeli Prime Minister Benjamin Netanyahu warned that Iran would reach the brink of being able to build a nuclear bomb in just six or seven months.
Factory activity in New York state contracted for a second month in a row in September, falling to its lowest level in nearly 3-1/2 years, according to a report on Monday from the Federal Reserve Bank of New York. A national manufacturing survey by an industry group earlier this month showed the sector contracted for a third month in August.
The Dow Jones industrial average <.dji> dropped 32.18 points, or 0.24 percent, to 13,561.19. The Standard & Poor's 500 Index <.spx> lost 2.62 points, or 0.18 percent, to 1,463.15. The Nasdaq Composite Index <.ixic> fell 7.76 points, or 0.24 percent, to 3,176.19.
Major Japanese companies, including Nissan and Honda, announced factory shutdowns in China on Monday and Japanese expatriates were urged to stay indoors ahead of what could be more angry protests over a territorial dispute between Asia's two biggest economies.
Lowe's Cos Inc
General Electric Co
Tyco International Ltd
Industrial and medical conglomerate Danaher Corp
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry and Jan Paschal)
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