BY ABHIRAM NANDAKUMAR
U.S. stock indexes were lower on Monday morning, led by materials and energy stocks, after last week’s rally in oil prices fizzled out.
Crude prices resumed their slide, after a strong two-day run, as a record output from Iraq flooded a heavily oversupplied market. [O/R]
U.S. stocks logged their first week of gains in the year last week, with the three indexes closing up 2 percent on Friday.
Investors, already rattled by the volatile start to the year and a steep fall in oil prices, are also awaiting U.S. GDP data on Friday for a reading on the health of the economy.
“So right now, we’re in wait-and-see mode as the market pauses to digest last week’s very strong gains,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
Corporate results are not likely to improve sentiment, with quarterly profits at S&P 500 companies expected to fall 4.3 percent, according to Thomson Reuters data. Excluding energy companies, earnings are estimated to grow by 1.7 percent.
At 9:37 a.m. ET, the Dow Jones industrial average .DJI was down 82.69 points, or 0.51 percent, at 16,010.82, the S&P 500 .SPX was down 10.09 points, or 0.53 percent, at 1,896.81 and the Nasdaq Composite index .IXIC was down 19.26 points, or 0.42 percent, at 4,571.92.
All 10 major S&P sectors were lower, led by the 1.93 percent fall in the materials sector .SPLRCM.
International Paper (IP.N) was down 7.3 percent at $33.80 after Citigroup and Jefferies cut their ratings. The stock weighed the most on the materials sector.
Exxon (XOM.N) and Chevron (CVX.N) were off 1.6 percent.
Shares of Caterpillar (CAT.N) were down 3.4 percent at $58.88 after Goldman Sachs cut its rating on the stock to “sell”. The stock was the biggest drag on the Dow.
McDonald’s (MCD.N) was up 2.5 percent at $121.39 after the Dow component reported better-than-expected same-store sales.
Tyco International (TYC.N) jumped 6.7 percent to $32.63 after Johnson Controls (JCI.N) said it would merge with the Irish fire protection and security systems maker. Johnson Controls was down 1 percent at $35.28.
Twitter (TWTR.N) was down 5.6 percent at $16.82 after Chief Executive Jack Dorsey said four senior executives would leave the social media company.
D.R. Horton (DHI.N) was down 2.4 percent at $27.05, while Kimberly-Clark (KMB.N) was down 2.8 percent at $123.18 after its profit and sales missed estimates.
Declining issues outnumbered advancing ones on the NYSE by 2,054 to 635. On the Nasdaq, 1,518 issues fell and 721 advanced.
The S&P 500 index showed one new 52-week high and 6 new lows, while the Nasdaq recorded eight new highs and 15 new lows.
(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva)