Stocks wavered on Monday, with benchmark indexes backing off milestones that lifted the Nasdaq above 4,000 for the first time in 13 years, as Wall Street pondered an unexpected drop in pending home sales and an agreement by Iran to limit its nuclear program.
"Making new highs with poor or lagging breadth is not a healthy picture. However, this market can be so rotational that poor breadth does not scare anyone as the market always seems to come back," noted Elliot Spar, market strategist at Stifel, Nicolaus & Co.
The Dow Jones Industrial Average closed 7 points higher unofficially, with Caterpillar leading gains after Bank of America upgraded shares of the maker of farming and mining equipment. Boeing shares fell 2 percent after the airline manufacturer warned of engine icing risk on its new 747-8 and 787 Dreamliner planes.
Shares of Wal-Mart Stores rose after the discount retailer and Dow component said Doug McMillon, who runs its international business, would succeed Mike Duke as president and CEO, effective Feb. 1.
After climbing to an intraday record of 1,808.11, the S&P 500 lapsed into negative terrain and closed 2 points down, with energy and materials leading the drop among its 10 major sectors.
After climbing above 4,000 for the first time since September 2000, the Nasdaq held a small gain, but fell back to close at 3994.57 .
The National Association of Realtors reported signed contracts to buy existing homes declined for a fifth straight month in October, illustrating a slowing in the housing market. The gauge of closed sales in November and December fell 0.6 percent from an upwardly revised September reading.
While the details are to be determined, the accord reached with Iran "bodes well, and is a net positive for equities, and today's action would support that" said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "Housing has lost some steam of late, which may be a function of higher mortgage rates," said Sandven, who adds that "we expect the housing recovery is still occurring."
The interim agreement between Iran, the U.S. and five other nations would have Iran curtailing its nuclear activities in return for reduced international sanctions on car parts and commodities including oil and gold. The deal prompted shares of airlines to jump, along with those of auto-parts makers.
"The initial Iranian agreement with the world to surrender its nuclear ambitions - at least the naughty part - is bolstering stocks and goosing the dollar. Commodity prices are finding a clearer path during a difficult year when traditional correlations fell by the wayside," Andrew Wilkinson, chief economic strategist at Miller Tabak, wrote in emailed commentary. "But the path is down," he added.
Oil futures declined 88 cents, or 0.9 percent, to $93.96 a barrel on the New York Mercantile Exchange. Gold futures for February delivery lost $3.00, or 0.2 percent, to $1,241.60 an ounce.
The dollar rose against major U.S. trading partners, especially the Japanese yen, and Treasury prices gained, with the yield on the benchmark 10-year note down 1 basis point at 2.74 percent.
A strong finish on Wall Street last week also underpinned gains in Europe and Asia. The S&P 500 recorded its first close above 1,800 and the Dow posted its longest weekly winning streak in nearly three years.
In days ahead, the focus will be on economic data ahead of Thursday's Thanksgiving holiday.
"We'll get a few further clues as to whether the Fed can afford to play Scrooge leading up to the festive season," said Deutsche Bank's Jim Reid in a morning research note, referring to the possible pace and timing of the Federal Reserve's eventual cutting back in its monthly asset purchases.
First published November 25 2013, 1:08 PM