* Wall St extends pullback after worst week of the year
* Earnings, economic worries offset monetary stimulus
* Lufkin stock jumps almost 38 pct on GE's plan to buy
* Dow off 0.3 pct; S&P 500 off 0.01 pct; Nasdaq down 0.1 pct
By Angela Moon
NEW YORK, April 8 U.S. stocks declined modestly
on Monday as investors faced the prospect of a lackluster
earnings season and an economy that could be hitting a slow
Tepid earnings could give investors a reason to sell some
equities and push both the Dow and the S&P 500 back from their
recent record highs.
The early pullback extended Friday's decline that had pushed
the S&P 500 into its worst weekly percentage loss for the year.
Defensive shares led Monday's downside move, including the S&P
telecommunications sector index, off 0.7 percent.
Financial stocks also fell, extending last week's slide.
Goldman Sachs shares lost 1.2 percent to $142. Wells
Fargo & Co shares also dropped 1.2 percent - to $36.69.
Earnings forecasts have been scaled back, heading into
first-quarter reports. S&P 500 companies' earnings are expected
to have risen just 1.6 percent from a year ago, according to
Thomson Reuters data, down from a forecast in January calling
for a gain of 4.3 percent.
Stocks have rallied strongly this year with major indexes
hitting record highs, helped in part by the Federal Reserve's
stimulus program. The S&P 500 is up nearly 9 percent for the
year so far, while the Dow has gained just under 11 percent.
The S&P 500 "had its worst week of the year. Still, it would
be premature to conclude that the party is over," said Jerry
Webman, chief economist at OppenheimerFunds, in New York.
"The index remains reasonably valued by a range of metrics.
Constituents' earnings and sales multiples are still lower than
they were at either of the last two market peaks, and cash on
companies' balance sheets is higher."
A worse-than-expected jobs report on Friday added to fears
that the pace of economic growth could be softening after
generally upbeat data at the start of the year.
But loose monetary policy from central banks around the
world still makes equities attractive to investors, and
pullbacks could be used as buying opportunities, analysts said.
The Bank of Japan started its bond purchases on Monday after
it announced last week it will inject about $1.4 trillion into
the economy in less than two years.
Fed Chairman Ben Bernanke will give a speech later on Monday
after markets are closed. Investors have been watching for any
insight into the Fed's thinking on how long the central bank
will keep its asset purchase program in place as it tries to
boost the economic recovery.
The Dow Jones industrial average was down 37.64
points, or 0.26 percent, at 14,527.61. The Standard & Poor's 500
Index inched down just 0.11 of a point, or 0.01 percent,
to 1,553.18. The Nasdaq Composite Index was down 2.43
points, or 0.08 percent, at 3,201.43.
"At this point, having pulled back from its new high, the
S&P 500 is likely to find resistance again around the old record
high of 1,565 in the near term, but any subsequent weakness
would likely find some support near 1,546," said Randy
Frederick, managing director of active trading and derivatives
at Charles Schwab in Austin, Texas.
General Electric Co said it will buy oilfield pump
maker Lufkin Industries Inc for about $2.98 billion,
driving Lufkin shares up nearly 38 percent to $87.97. GE, a Dow
component, declined 0.2 percent to $22.88.
Among blue-chip stocks, Johnson & Johnson Inc was
the Dow's biggest percentage decliner after JPMorgan downgraded
the healthcare company's stock to "neutral" from "overweight,"
saying Johnson & Johnson was facing "a messy first quarter and a
likely downward revision to 2013 guidance." The stock fell 1.7
percent to $80.68.
Among technology stocks, HP shares shed 1 percent to
$21.74. Google Inc slid 1.7 percent to $769.99.