* Focus turns to earnings season
* Defensive sectors outperform for the day
* VIX pops but still at low levels
* Dow off 0.3 pct; S&P 500 down 0.4 pct; Nasdaq off 0.6 pct
(Updates to midday)
By Ryan Vlastelica
NEW YORK, July 7 U.S. stocks fell on Monday,
pulling back from record levels as investors held off from
making big plays before the start of earnings season.
Cyclical stocks, which are tied to the pace of economic
growth, were among the weakest of the day, with the S&P
industrial sector index down 0.5 percent. The only
sectors in positive territory were defensive groups like
utilities and telecom.
Small-cap stocks also underperformed for the day, with the
S&P Small-Cap 600 index down 1.2 percent. The Russell
2000 fell 1.4 percent.
Wall Street hit a number of milestones on Thursday, the
final trading session before the Independence Day holiday, with
the Dow topping 17,000 for the first time and the S&P 500
closing at a record high after a strong June jobs report.
While the market's uptrend is still viewed as intact,
trading may be light with few major catalysts on deck. Action
may pick up later this week with the release of quarterly
results from Alcoa Inc and Wells Fargo & Co.
"This earnings season has a lot of pressure on it since we
need to see significant revenue growth to offset weakness in the
first quarter," said Oliver Pursche, president of Gary Goldberg
Financial Services in Suffern, New York. "There are still areas
of the market that are overvalued, especially in the small-cap
Dozens of major companies are scheduled to report next week,
including numerous Dow components. Profits are forecast to grow
6.2 percent for the quarter, according to Thomson Reuters data,
but investors see a slight chance that profits could return to
double-digit growth for the first time in nearly three years.
The Dow Jones industrial average fell 50.42 points or
0.3 percent, to 17,017.84. The S&P 500 lost 8.06 points
or 0.41 percent, to 1,977.38. The Nasdaq Composite
dropped 28.59 points or 0.64 percent, to 4,457.33.
Wall Street has been strong lately, with major indexes
hitting a series of records and the Nasdaq closing out its third
straight positive week last week.
The CBOE Volatility index jumped nearly 11 percent,
but at 11.44 it remained at an extremely low level from a
historical perspective. On Thursday the "fear index" closed at
its lowest level since February 2007, adding to concerns that
markets are not factoring in issues that could derail the rally.
While the June nonfarm payrolls report confirmed
expectations that the economy bounced back in the second
quarter, some analysts speculated that it also meant the Federal
Reserve might raise interest rates earlier than had been
Goldman Sachs estimated that the Fed could raise rates in
the third quarter of 2015, compared with an earlier estimate of
the first quarter of 2016.
The FTSEurofirst 300 index of pan-European shares
fell 0.9 percent after data showed German industrial output
declined 1.8 percent in May, its biggest drop in more than two
BioDelivery Sciences International Inc shares
surged 10.3 percent to $13.23 after the company said its
experimental pain drug, which it made with Endo International
Plc, was found effective in a late-stage trial.
GT Advanced Technologies tumbled 13 percent to $17
on heavy volume after UBS removed the company from its U.S. Key
(Editing by Lisa Von Ahn, Nick Zieminski and Jan Paschal)