* Caterpillar profit stronger than expected; shares rally
* U.S. new home sales fall for second straight month in Dec.
* Apple shares slide after the bell following results
* Dow down 0.3 pct, S&P 500 off 0.5 pct, Nasdaq down 1.1 pct
By Caroline Valetkevitch
NEW YORK, Jan 27 U.S. stocks extended recent
losses on Monday, with the S&P 500 falling for a third straight
session as concern grew about the Federal Reserve's plans for
The losses, which picked up late in the session after the
S&P 500 briefly traded in positive territory, followed a steep
selloff late last week tied to emerging market concerns. The
slide gave the S&P 500 its worst weekly percentage loss since
Caterpillar Inc, however, limited the losses of the
Dow and S&P 500. The stock jumped 5.9 percent to $91.29 after
the maker of mining and construction equipment reported a
stronger-than-expected quarterly profit.
The technology sector led the day's decline, with the S&P
500 technology sector index falling 1 percent and the
Nasdaq underperforming both the Dow and S&P 500. Google
, off 2 percent at $1,101.23, and Microsoft,
down 2.1 percent at $36.03, were among the day's biggest drags.
After the bell, shares of Apple fell 5.7 percent to
$519.38 after its results showed iPhone holiday sales lagged
Wall Street's expectations.
"There's still a lot of nervous money hanging around," said
Bucky Hellwig, senior vice president of BB&T Wealth Management
in Birmingham, Alabama.
"The Fed is meeting this week, and the consensus is they're
going to proceed with the taper."
The Fed's two-day policy meeting begins on Tuesday. Many
market participants are bracing for the market to sell off if
the Fed decides to keep withdrawing stimulus. In
December, the U.S. central bank announced plans to begin scaling
back its massive bond-buying program.
The Dow Jones industrial average fell 41.23 points or
0.26 percent, to end at 15,837.88. For the Dow, Monday marked a
fifth session of losses.
The S&P 500 dropped 8.73 points or 0.49 percent, to
finish at 1,781.56. The Nasdaq Composite slid 44.56
points or 1.08 percent, to close at 4,083.61.
Last week's heavy selling raised some concerns that the
market may be in for a major correction, especially with the S&P
500 closing on Friday below its 50-day moving average for the
first time since Oct. 9 and falling further below that level on
Monday. The Nasdaq also ended below its 50-day moving average on
In another indicator of possible market direction, the Dow
Jones Transportation Average ended down 0.8 percent after
dropping 4.1 percent on Friday, its biggest decline since
Some did not consider the recent selling as cause for
"The slowdown in emerging markets isn't prevalent enough to
derail the deepening economic recovery that we're seeing across
developed markets," said Steven Rees, U.S. head of equity
strategy at J.P. Morgan Private Bank in New York.
"We're not expecting a major correction in the market this
Another dampener on Monday's sentiment was data showing
sales of new U.S. single-family homes fell more than expected in
December, even though lean inventories and steady price gains
suggested sufficient strength in the housing market.
But Caterpillar was the latest major company to beat on
bottom-line results. Caterpillar's cost cuts and an uptick in
demand for building equipment offset weak sales to the mining
S&P 500 earnings for the fourth quarter are now expected to
have increased 8 percent from a year ago, with 66.7 percent of
results so far beating analysts' profit expectations, Thomson
Reuters data showed. Revenue growth for the quarter is estimated
at just 0.5 percent.
Volume was above average for the month. About 8 billion
shares changed hands on U.S. exchanges, compared with the
average of 6.8 billion so far this month, according to data from
BATS Global Markets.
Decliners outnumbered advancers on the New York Stock
Exchange by about 3 to 1. On the Nasdaq, more than three stocks
fell for every one that rose.