* VIX rises the most in a month, level still subdued
* Lululemon, SodaStream, Express Inc, Aaron's disappoint,
* Indexes down: Dow 1.1 pct, S&P 1.3 pct, Nasdaq 1.5 pct
By Rodrigo Campos
NEW YORK, Jan 13 U.S. stocks tumbled on Monday
on caution ahead of corporate results, as mounting negative
pre-announcements left a lackluster profit growth outlook.
Wall Street has seen a slow start to the year following a
gangbusters 2013. After the S&P 500's jump of almost 30 percent
last year, its forward price-to-earnings ratio is the highest in
nearly seven years and investors are weighing the risk of paying
such a high premium for earnings that may see growth stall.
Almost 10 out of every 11 earnings pre-announcements for the
current earnings season from S&P 500 companies have lowered
estimates, according to Thomson Reuters data.
Various companies that posted weak earnings or forecasts on
Monday, including SodaStream, Lululemon Athletica
, Express Inc and Aaron's saw their
stocks get hit hard.
"People have moved to the sidelines waiting for earnings to
get a little more clarity," said Michael O'Rourke, chief market
strategist at JonesTrading in Greenwich, Connecticut.
"Fundamentals are going to have to support gains in the
future," he said, pointing to the gradual decline in the
stimulus from the Federal Reserve that has pushed U.S. equities
as an asset class higher.
After the stellar year stocks had in 2013, "there's no need
to be aggressive in 2014 until the companies you care about have
reported earnings and given you an all-clear," said O'Rourke.
The Dow Jones industrial average fell 179.11 points
or 1.09 percent, to 16,257.94, the S&P 500 lost 23.17
points or 1.26 percent, to 1,819.2 and the Nasdaq Composite
dropped 61.36 points or 1.47 percent, to 4,113.304.
Investor anxiety translated into a willingness to pay more
for insurance against a drop in the S&P 500. The CBOE volatility
Index jumped 9.4 percent to 13.28 in its largest daily
percentage gain in a month. The VIX, however, remains at very
low historical levels.
Lululemon, Express Inc, Aaron's and SodaStream gave weak
outlooks. Lululemon sank 16.6 percent to $49.70 while Express
slid 4.6 percent to $18.15; Aaron's lost 6.8 percent to $27 and
SodaStream plunged 26 percent to $36.94.
But Wendy's outlook was a bright spot, sending
shares up 6.4 percent to $8.98 after the fast-food restaurant
chain estimated adjusted quarterly earnings above analysts'
In merger news, Beam Inc agreed to be acquired by
Suntory Holdings Ltd for $16 billion, including debt. Shares of
Beam jumped 24.6 percent to $83.42.
After the closing bell, Google agreed to acquire
Nest Labs Inc for $3.2 billion in cash. Google shares edged 0.6
percent higher in after-market trade.
Volume was above average, with about 7.1 billion shares
traded on U.S. exchanges, compared with the 6.44 billion average
so far this month, according to data from BATS Global Markets.
Declining stocks outnumbered advancing ones on the NYSE and
Nasdaq by a ratio of about 5 to 2.