Stocks lower as investors lock in profits
— -- Investors sold off stocks Monday, giving a four-week rally in stocks a breather.
Rattled by a breakdown in talks for IBM to buy Sun Microsystems and more negative buzz about financials, the Dow Jones industrial average sank 41.74, or 0.5%, to 7975.85. The Dow is now down 9.1% this year.
Hurt mostly by stocks in the photo products, diversified banks and regional banks industries, the Standard & Poor's 500 fell 7.02, or 0.8%, to 835.48. The S&P 500 is down 7.5% in 2009 so far.
Meanwhile, the tech-heavy Nasdaq composite fell 15.16, or 0.9%, to 1606.71, parking it up 1.9% for the year.
Given the 23% rise in the S&P 500 since March 9, investors shouldn't be all that surprised to see a pullback, says Richard Cripps, strategist at Stifel Nicolaus. "This is profit taking. I wouldn't read into it any more than that."
The sell-off was a bit disappointing, since it was the Dow's first loss in five trading days. And while the Dow narrowed its loss during the day, it never once went into positive territory.
Investors hoping to creep back into stocks, though, should be glad there's still a large degree of skepticism, says Carmine Grigoli, strategist at Mizuho Securities. These declines offer patient investors a chance to buy at low prices. "Most investors are confused and don't have the conviction they had," he says. "The correct strategy is to buy the dips."
Highlights:
• MGM Mirage, a large operator of casinos, jumped 88 cents, or 19%, to $5.53 on news reports indicating the company may sell several casinos to raise cash.
• Legacy Reserves, an energy-production partnership, rose $2.95, or 29%, to $12.98. The company said it received a buyout offer from private equity firm Apollo Management for $14 a share.
• Sun Microsystems fell $1.93, or 23%, to $6.56 after IBM walked away from a buyout deal. IBM fell 66 cents to $101.56.
• JPMorgan Chase fell $1.08, or 3.7%, to $28.20 after banking analyst Mike Mayo, of Calyon Securities, issued a negative opinion about the industry and warned more large write-downs are coming. Citigroup fell 13 cents, or 4.6%, to $2.72, and Bank of America lost 12 cents, or 1.6%, to $7.48.
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