Wall Street finished a quiet session mostly lower Monday as investors cashed in some gains from last week's rally and readied for quarterly corporate earnings reports.
The Treasury bond market was closed for the Columbus Day holiday and there was no major economic news to guide investors, so Wall Street remained cautious ahead of the flood of third-quarter results. Aluminum producer Alcoa Inc., one of the 30 Dow Jones industrial average components, kicks off the earnings season on Tuesday.
Earnings are expected to reflect the difficulty some companies have faced — particularly in the financial and housing sectors — following upheaval in the credit markets amid overly leveraged debt and defaults in subprime mortgages. The reports will also give insight into the fourth quarter, which market participants predict will bring more robust growth.
"There's room for a rally if third-quarter earnings come in stronger than expected, but they do want to see that the fourth quarter is going to be strong as well," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
Trucking company Ryder System Inc. contributed to Wall Street's wariness Monday when it lowered its third-quarter and full-year forecasts on weakness in its fleet management business.
The Dow fell 22.28, or 0.16 percent, to 14,043.73.
Broader stock indexes were mixed. The Standard & Poor's 500 index fell 5.01, or 0.32 percent, to 1,552.58, while the Nasdaq composite index rose 7.05, or 0.25 percent, to 2,787.37.
Trading volumes were low, with many investors on the sidelines for the holiday. Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 852.1 million shares, down from 1.26 billion shares Friday.
Trading was also light because the market is waiting for Tuesday's release of minutes from the Federal Reserve's Sept. 18 meeting, when policy makers lowered interest rates by a half-point. Wall Street hopes the minutes reveal hints that more rate cuts are in store, which could further loosen the credit markets and fuel spending.
The tech-heavy Nasdaq got a boost from Google Inc., which surpassed $600 for the first time and extended a monthlong rally after upbeat projections about third-quarter earnings. The company's initial public offering price was $85 in August 2004, and shares on Monday rose $15.57, or 2.6 percent, to $609.62.
The Nasdaq was also lifted by Business Objects SA, a French company with U.S.-traded shares that rose $7.56, or 15 percent, to $57.83. German software company SAP AG said late Sunday it would pay $6.79 billion for Business Objects SA. SAP fell $2.87, or 4.9 percent, to $56.36.
SAP's bid for Business Objects preceded a $1.1 billion bid Monday morning from diversified conglomerate Textron Inc. for United Industrial Corp. Textron fell $1.37, or 2.1 percent, to $64.01, and United Industrial rose $4.77, or 6.3 percent, to $80.39.
Though the credit market is tighter than it was earlier in the year, companies still appear to have an appetite for deal-making — which often involves taking on debt.
"We find it encouraging that there were two major buyouts this morning. It shows that the credit markets are firming up and companies are coming back into play," Detrick said.
Last week, the Dow and the S&P both rose to new records as investors sensed that corporations are likely to bounce back from last quarter, and that the economy is unlikely to fall into recession. The Labor Department's jobs report Friday said payrolls increased in September by a net 110,000, and that the August jobs climate was better than previously reported.
Bob Doll at BlackRock Inc. pointed out that jobs growth is still at its lowest level in many years.
"With the U.S. economy continuing to grow at a relatively slow pace, the main risk to equities appears to be the earnings backdrop," Doll wrote in a note. "We are at the cusp of the third-quarter reporting season, and expectations are for earnings to be in the mid-single digits, the slowest pace since 2003."
Many analysts predict third-quarter percentage growth to be in the low-to-mid single digits, but the S&P forecasts a modest decline in total earnings per share for S&P 500 companies. S&P, along with many other market watchers, anticipates double-digit percentage growth in the fourth quarter.
Ryder fell $3.33, or 6.8 percent, to $45.92 after cutting its earnings forecasts.
Light, sweet crude tumbled fell $2.20 to $79.02 per barrel on the New York Mercantile Exchange. Falling oil prices can be taken both positively and negatively by the stock market: they tend to boost consumer spending, but they dampen energy company profits.
Gold fell as the dollar rose against major rival currencies.
Overseas, markets in Japan were closed for a holiday. Britain's FTSE 100 fell 0.83 percent, Germany's DAX index fell 0.35 percent, and France's CAC-40 declined 0.24 percent.