* Fed could signal plans about stimulus, jobs data this week
* Drug firm Perrigo to buy Elan; Publicis, Omnicom in merger
* U.S. pending home sales pull back in June as mortgage
* Dow off 0.2 pct, S&P down 0.4 pct, Nasdaq off 0.4 pct
By Caroline Valetkevitch
NEW YORK, July 29 U.S. stocks fell on Monday,
pulling back before this week's Federal Reserve meeting that
could signal when the Fed is going to begin reducing its bond
purchases aimed at helping the economic recovery.
Losses were led by the energy and financial sectors, with
both the S&P energy index and S&P financial index
down 0.8 percent. Shares of Southwestern Energy
slid 3 percent to $38.14 and shares of Noble Energy fell
2.1 percent to $62.07 following as a decline in natural gas
Several merger announcements helped to limit losses, along
with news of a $1 billion stock repurchase program by
Caterpillar that pushed its stock up 1.1 percent to
$83.03, making it the biggest support for the Dow.
But the Fed's statement, which is due on Wednesday after a
two-day meeting of the Fed's Open Market Committee, kept
investors wary of buying. The statement will be scrutinized for
hints on when the central bank may begin to scale back its
massive bond-buying aimed at stimulating the economy.
Data this week includes July's payrolls report, another key
event for the market.
"A lot depends on how (Fed policymakers) interpret the data
and how they comment ahead of the employment report. We're
looking for clues as to whether tapering is going to begin in
September or not," said Bucky Hellwig, senior vice president at
BB&T Wealth Management in Birmingham, Alabama.
The Dow Jones industrial average was down 36.86
points, or 0.24 percent, at 15,521.97. The Standard & Poor's 500
Index was down 6.32 points, or 0.37 percent, at 1,685.33.
The Nasdaq Composite Index was down 14.02 points, or
0.39 percent, at 3,599.14.
September is the most likely time for the Fed to begin
paring its $85 billion in monthly bond purchases, according to a
July 22 Reuters poll of economists.
Some investors have worried that big gains in jobs numbers
could be enough of an economic pickup to prompt an early end to
the Fed's bond buying, a program which has helped stocks rally
for much of this year.
But analysts have noted that signs of a stronger economy are
more important for the market in the long run. The S&P 500 is up
18.2 percent for the year so far.
Monday's data was less than upbeat. Contracts to purchase
previously owned U.S. homes fell in June, retreating from a more
than six-year high touched in May as rising mortgage rates were
starting to dampen home sales.
Merger activity could give equities support as big deals
show that large investors see value in the market.
"It's interesting to me that you've got deal activity this
time of the year because normally this is the time of the year
when the markets are quite quiet," said Dan Veru, chief
investment officer of Palisade Capital Management in Fort Lee,
New Jersey, which manages about $4.5 billion in assets.
"To have mergers going on now probably bodes well that the
fall is going to be a very active period."
U.S. drugmaker Perrigo agreed to buy Irish drug
company Elan for $8.6 billion. U.S.-traded Elan shares
rose 3.5 percent to $15.46. Perrigo was the S&P 500's
worst percentage decliner, shedding 6.7 percent to $125.17.
Hudson's Bay Co, operator of department store
chains Lord & Taylor in the United States and The Bay in Canada,
said it would buy luxury retailer Saks Inc for $16 per
share. Saks shares rose 4.2 percent to $15.95.
Shares in advertising groups jumped after Publicis
and Omnicom said they would merge. Investors bet the
deal would create an opening for rivals to poach defecting
clients and potentially trigger more deals.
Omnicom shares were down 0.6 percent to $64.75 while smaller
rival Interpublic Group gained 4.7 percent to $16.61.
Among the day's big gainers, shares of CF Industries
Holdings Inc, the world's second-largest maker of
nitrogen fertilizer, jumped 11.8 percent to $202.30 after
activist hedge fund Third Point LLC said it had acquired a
In earnings news, Loews Corp, the hotel, energy and
financial services conglomerate, posted a jump in second-quarter
profit as revenue from its insurance arm, CNA Financial,
increased nearly 13 percent. Shares of Loews ended up 0.02
percent at $46.06.
After the closing bell, shares of PMC-Sierra were
down 8.7 percent at $6.40 following the release of its results.
With results in from more than half of the S&P 500
companies, 67.2 percent are beating analysts' earnings
expectations - in line with the 67 percent average beat over the
last four quarters. About 56 percent of the companies are
beating revenue expectations, more than the 48 percent of
revenue beats in the past four earnings seasons, Thomson Reuters
Volume was roughly 5.2 billion shares traded on the New York
Stock Exchange, the Nasdaq and the NYSE MKT, well below the
average daily closing volume of about 6.4 billion this year.
Decliners outpaced advancers on the NYSE by about 2.3 to 1
and on the Nasdaq by a ratio of more than 2 to 1.