Stocks drop as investors take gains

Traders work on the floor at the New Traders work on the floor at the New York Stock Exchange on New Year's Eve. (Dec. 31, 2012) Photo Credit: AP

advertisement | advertise on newsday

Investors started the week on a cautious note, pulling the Standard & Poor's 500 index down from the five-year high it reached Friday.

The move lower Monday is likely the result of traders taking some winnings off the table after the stock market's surge last week, said Sam Stovall, chief equity strategist at S&P Capital IQ.

Investors are also preparing for corporate America's seasonal parade of earnings reports, which starts Tuesday.

"You can summarize it as profit-taking and preparation," Stovall said. "Investors are digesting some of those gains from last week and positioning themselves so they're not too far extended if fourth-quarter earnings slip a bit."

The S&P 500 fell 0.31 percent to close at 1,461.89. The Dow Jones industrial average lost 50.92 points to 13,384.29, while the Nasdaq composite dropped 0.09 percent to 3,098.81.

The S&P 500 soared 4.6 percent last week, ending Friday at a five-year high. The government reported hiring held up in December during the tense budget negotiations in Washington.

advertisement | advertise on newsday

Investors are now shifting their focus to corporate profits. Aluminum producer Alcoa launches the reporting season for the fourth quarter of 2012 after the market closes today. -- AP

You also may be interested in: