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US STOCKS-Wall St falls on caution ahead of earnings
January 13, 2014 / 7:50 PM / in 4 years

US STOCKS-Wall St falls on caution ahead of earnings

* Investors looking ahead to bellwether company earnings

* Lululemon, SodaStream, Express fall after outlooks

* Indexes down: Dow 0.8 pct, S&P 1 pct, Nasdaq 1.1 pct

By Rodrigo Campos

NEW YORK, Jan 13 (Reuters) - U.S. stocks fell on Monday on caution ahead of an onslaught of corporate results as negative pre-announcements pile up, leaving 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 premium for earnings that may see growth stall.

Almost 10 out of 11 earnings pre-announcements from S&P 500 companies lowered estimates, according to Thomson Reuters data.

Various companies that cut forecasts on Monday, including SodaStream, Lululemon Athletica, Express Inc and Aaron’s saw their stocks get hit.

“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 135.76 points or 0.83 percent, to 16,301.29, the S&P 500 lost 17.57 points or 0.95 percent, to 1,824.8 and the Nasdaq Composite dropped 45.34 points or 1.09 percent, to 4,129.324.

Equities have started 2014 on a lackluster note as market participants tried to gauge how quickly the Fed will wind down its stimulus.

Lululemon, Express Inc, Aaron’s and SodaStream gave weak outlooks. Lululemon sank 16.6 percent to $49.69 while Express slid 2.9 percent to $18.47; Aaron’s lost 7.1 percent to $26.92 and SodaStream plunged 23.9 percent to $37.96.

But Wendy’s outlook was a bright spot, sending shares up 6.2 percent to $8.96 after the fast-food restaurant chain estimated adjusted quarterly earnings above analysts’ expectations.

In merger news, Beam Inc agreed to be acquired by Suntory Holdings Ltd for $16 billion, including debt. Shares of Beam jumped 24.2 percent to $83.18.

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