Wall Street pulled back Monday, as cautious investors decided to cash in on the stock market’s recent gains despite upbeat news about IBM Corp. and Intel Corp.
Analysts said many investors were again questioning current stock valuation levels after several weeks of advances. A suicide car bombing in the Saudi Arabian capital Riyadh that killed 17 people over the weekend also weighed on stocks.
“People are being guarded,” said Paul McManus, senior vice president and director of research at Independence Investment LLC. “People are looking at the market and wondering, ‘Have I missed the rally, can I continue to be aggressive at these levels?”’
The bombing in Saudi Arabia “also was somewhat disconcerting,” he said. “People might try to assess how bad it can get or whether it portends anything further.”
The Dow Jones industrial average closed Monday’s subdued session down 53.26 points, or 0.5 percent, at 9,756.53, having edged up 0.1 percent last week.
The broader market also retreated. The Nasdaq composite index lost 29.10 points, or 1.5 percent, to close at 1,941.64 following last week’s advance of 2 percent. And the Standard & Poor’s 500-stock index fell 6.10 points, or 0.6 percent, to 1,047.11, having gained 0.2 percent last week.
After the bombing, the United States said Monday it would help Saudi Arabia with its war on terror. Saudis blamed the attack over the weekend on al-Qaida militant.
International Business Machines Corp. gained $1.69 to $89.95 after Barron’s published a cover story saying the company should benefit from a rebound in corporate computer spending.
But Intel fell 48 cents to $33.39 even though J.P. Morgan Securities raised the chip maker’s stock rating to “overweight” from “neutral.”
Investors have sent stocks higher in recent weeks on optimism for a strong economic recovery. But with the earnings season winding down and stocks near 52-week highs, investors have little motivation to push the market significantly higher, analysts say.
Since hitting a low on March 11, the Dow has gained 30 percent, the Nasdaq is up 53 percent, and the S&P has risen 31 percent.
“The early portions of the economic recovery are already priced into the markets,” said Subodh Kumar, chief investment strategist for CIBC World Markets. He believes the main gauges will be confined to a trading range for the next several months, with the S&P hitting an upper range of 1,075, the Dow possibly reaching 10,000 and the Nasdaq hovering near the 2,000 mark.
“For investors, sideways and range-bound trading after the strong upswing of the last year is actually quite healthy, I think,” Kumar said.
Tyson Foods Inc. rose 24 cents to $14.47 after the meat and poultry processor reported quarterly earnings that beat Wall Street’s estimates.
Decliners included R.R. Donnelley & Sons Co., which fell $1.47 to $26.56, after the commercial printer said it would acquire Canadian printer Moore Wallace Inc. for about $2.8 billion.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Volume was light.
The Russell 2000 index, which tracks smaller company stocks, fell 9.75, or 1.8 percent, to 533.21.
Overseas, Japan’s Nikkei stock average finished 1.2 percent lower. In Europe, France’s CAC-40 declined 0.8 percent, Britain’s FTSE 100 was down 0.8 percent and Germany’s DAX index dropped 1 percent.