Stocks close down, await earnings reports

After pushing stocks to records last week, investors turned cautious on Monday, the eve of the start of a new round of earnings reports.

At the close on Wall Street, the Dow Jones industrial average ended down 44.1 points at 17,024.2. The Standard & Poor's 500 index was off 7.8 points at 1,977.7, and the Nasdaq composite was down 34.4 points at 4,451.5.

The Dow reached a record and a new 1,000-point milestone last Thursday by closing above 17,000 for the first time. That followed a strong U.S. jobs report. U.S. markets were closed Friday for the Independence Day holiday.

Investors Monday moved money into stocks traditionally thought of as safer than the broader market: utilities, telecommunication companies and consumer staples such as soft drinks and detergent.

"All eyes have turned to earnings," said Joe Tanious, global market strategist with J.P. Morgan Funds.

There's a lot riding on this quarter's earnings season. Investors largely believe the weather had an unusually large impact on the U.S. economy in the first three months of year, and that economic activity rebounded in the second three months of this year. Many companies blamed the weather for their disappointing first quarter results.

Secondly, stocks are trading at all-time highs and investors will need Corporate America to deliver on profits in order to justify these record-high prices.

Aluminum mining giant Alcoa reports its latest results on Tuesday and Wells Fargo, the No. 1 U.S. mortgage lender, reports on Friday. Investors are expecting second quarter profits to be up 4.9 percent from a year ago, according to FactSet.

"I think we're going to exceed expectations," Tanious said. "Companies were able to post 6 percent earnings growth in the first quarter, even with the U.S. economy contracting. Now that we've seen a rebound in economic activity, I think we're looking at a pretty good earnings season."