* Caterpillar profit stronger than expected, shares rally
* Apple earnings due after markets' close
* U.S. new home sales fall for second straight month in Dec
* Indexes lower: Dow 0.4 pct, S&P 0.7 pct, Nasdaq 1.5 pct
By Angela Moon
NEW YORK, Jan 27 U.S. stocks fell on Monday,
extending last week's steep selloff, as weaker-than-expected new
home sales data and ongoing concerns about emerging markets
weighed on investor sentiment.
The technology sector was the biggest loser with the Nasdaq
falling nearly 1.5 percent. The Dow industrial average, although
in negative territory, was outperforming the broader market
thanks to Caterpillar Inc which reported
"Earnings gave investors hope but the reality of all the
moving parts of emerging markets and weak home sales made them
rethink how good results from a handful of companies really
are," said Kim Forrest, analyst at Fort Pitt Capital Group Inc.
Investors were also cautious ahead of the Federal Reserve's
two-day policy meeting that begins on Tuesday. Many market
participants expect another selloff if the Fed decides to keep
withdrawing its stimulus, further pressuring equities already
roiled by a flight from emerging markets last week.
Big technology names weighed on the market. Google shares
were off 3.4 percent at $1,085.26. Microsoft shares
lost 2.2 percent to $36.01.
The Dow Jones industrial average fell 58.02 points or
0.37 percent, to 15,821.09, the S&P 500 lost 12.95 points
or 0.72 percent, to 1,777.34 and the Nasdaq Composite
dropped 61.438 points or 1.49 percent, to 4,066.736.
The day's declines followed a steep selloff last week,
raising concerns that the market may be in for a major
correction. The S&P 500 fell 2.6 percent for the week, closing
below its 50-day moving average for the first time since Oct. 9,
suggesting more selling may be ahead for the market that closed
out 2013 with a 30-percent gain.
"The decline today seems to be technical. We fell below the
1,800 level (on the S&P) and that accelerated the selling. The
next level of support is 1,775. I don't think we are in a
correction yet but if we go below this level, then we might have
to reassess," said Peter Cardillo, chief market economist at
Caterpillar shares jumped more than 4 percent to $89.70
after posting stronger-than-expected quarterly profit. Cost cuts
and an uptick in demand for building equipment offset continued
weak sales to the mining industry.
Apple Inc is due to report earnings after the close
of trading. It may notch its most successful holiday shopping
season yet, setting records for sales of its gift-friendly
iPhones and iPads. Apple will, however, continue to draw
investor scrutiny over sales in ultra-competitive China, its No.
2 market but a drag on revenue and margins in recent quarters.
In economic news, sales of new U.S. single-family homes fell
more than expected in December, but lean inventories and steady
price gains suggested sufficient strength in the housing market
to support the economy.
U.S. mobile group AT&T has ruled out a bid for
Britain's Vodafone for now, with banking sources saying
a U.S. spying scandal and a surge in European telecom shares may
have disrupted a deal that many think could still happen.
U.S.-listed shares of Vodafone fell 4percent to $36.53.