Stocks fell moderately Monday as news of job cuts at Merck and a mixed holiday sales snapshot prompted Wall Street to take a breather from its recent five-week rally.
The market was coming off seven consecutive trading days of gains in a year-end rally that vaulted the Standard & Poor's 500-stock and Nasdaq composite indexes to four-year highs, fed by an improving economic landscape and mounting eagerness for strong sales in December.
On Monday, the Dow Jones industrial average lost 40.90, or 0.37 percent, to 10,890.72. The S&P 500 slid 10.79, or 0.85 percent, to 1257.46, and the Nasdaq fell 23.64, or 1.04 percent, to 2239.37.
While some of the nation's retailers reported a solid opening to the holiday shopping season, other merchants said shopper traffic tailed off once Friday's bargains passed. Retail stocks fell despite Wal-Mart Stores and J.C. Penney posting better-than-expected numbers.
Sharply lower oil prices did little to energize the market either, although a recent slide in crude futures has helped temper fears about higher energy costs eating into consumer spending this year.
Steve Neimeth, senior vice president and portfolio manager for AIG SunAmerica, noted that investors may have found some weakness from declining sales of existing homes amid growing indications that the real estate market is starting to cool off. The National Association of Realtors said existing-home sales sank 2.7 percent to 7.09 million in October, below economists' forecast for 7.29 million.
This week brings a spate of key economic reports on gross domestic product growth, spending and employment.
Wal-Mart lost 49 cents, to $50.
J.C. Penney fell $1.22, to $52.88.
Target sank 51 cents, to $54.72.
Kohl's declined $2.18, to $47.02.
Federated Department Stores dropped $2.49, to $64.58.
Merck plans to slash 11 percent of its workforce and shut five manufacturing plants by 2008. The news sent shares sliding $1.42, to $29.56.
New York Stock Exchange composite index fell 60.10, to 7687.42.
American Stock Exchange index fell 9.87, to 1697.85.
Russell 2000 index of smaller-company stocks fell 12.08, to 671.50.
NYSE: 2.03 billion shares, up from 722 million on Friday. Decliners outnumbered advancers 2 to 1.
Nasdaq: 1.58 billion shares, up from 637 million. Decliners outnumbered advancers 7 to 3.
Crude oil for January delivery: $57.36, down $1.35.
Gold for current delivery: $498.30 a troy ounce, up from $492.10 on Wednesday.