Wall Street Drops Before Fed; Tech Sector Weighs
NEW YORK (Reuters) - Wall Street stocks fell on Monday as investors locked in gains on a recent rally ahead of possible policy action from the Federal Reserve later this week, while weakness in Intel shares weighed on the Nasdaq.
The benchmark S&P 500 index closed at highs last week not seen in nearly five years, motivating some investors to pull back from those gains Monday ahead of the Federal Reserve's decision on Thursday.
"The markets are up a lot, so the short-term risks are on the downside," said Jim Awad, managing director at Zephyr Management in New York.
Shares of Intel Corp
Investors are on guard against the unknown outcomes of several events this week, including a ruling by Germany's constitutional court on Wednesday on the legality of the euro zone's permanent financial rescue fund and the Fed decision on Thursday.
Expectations for more stimulus from central banks in the United States and Europe have underpinned markets in recent weeks.
The Fed looks set to launch a third round of bond purchases this week and economists said Friday's weak report on jobs growth for August was likely to convince the U.S. central bank a looser monetary policy was needed.
Analysts said the uptrend for markets remains intact, and traders were eyeing the 1,440 level on the S&P as the next barrier to further gains.
"When you have the central banks... practicing loose monetary conditions, you basically have a put on the market. And even any weakness that does develop should be somewhat contained," said Michael Gibbs, co-head of equity advisory group at Raymond James in Memphis, Tennessee.
The Dow Jones industrial average <.dji> ended down 52.35 points, or 0.39 percent, at 13,254.29. The Standard & Poor's 500 Index <.spx> closed down 8.84 points, or 0.61 percent, at 1,429.08. The Nasdaq Composite Index <.ixic> dropped 32.40 points, or 1.03 percent, to 3,104.02.
Investors sold some big-cap tech names that have done well all year. Worse-than-expected data on imports from China added to selling in the sector.
Chinese import data showed a fall of 2.6 percent on the year in August, short of expectations for a 3.5 percent rise. Exports grew 2.7 percent, below forecasts for a 3 percent rise in a Reuters poll.
American International Group Inc
Plains Exploration & Production Co
Titan Machinery Inc
On both the New York Stock Exchange and Nasdaq, three stocks fell for every two that rose.
Volume was light, with about 5.56 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.
(Editing by Dan Grebler)
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