Stocks off on Merck, sales data

Stocks fell moderately Monday as news of job cuts at Merck & Co. and a mixed holiday sales snapshot prompted Wall Street to take a breather from its recent five-week rally.

The market was coming off seven consecutive trading days of gains amid a year-end rally that vaulted the Standard & Poor’s 500 and Nasdaq composite indexes to four-year highs, fed by an improving economic landscape and mounting eagerness for strong sales in December.

But while some of the nation’s retailers reported a solid opening to the holiday shopping season, other merchants said shopper traffic tailed off once Friday’s bargains passed. Retail stocks fell despite Wal-Mart Stores Inc. and J.C. Penney Co. posting better-than-expected numbers.

Sharply lower oil prices did little to energize the market either, although a recent slide in crude futures has helped temper fears about higher energy costs eating into consumer spending this year.

Despite a clouded holiday retail sales outlook, Steve Neimeth, senior vice president and portfolio manager for AIG SunAmerica, said the broader picture remains positive.

“Bottom line, the consumer is extremely healthy and sentiment is good,” Neimeth said. “I believe they will be spending heavily this year, and that December retail sales will beat expectations.”

At the close of trading, the Dow Jones industrial average lost 40.90, or 0.37 percent, to 10,890.72.

Broader stock indicators retreated from their highest levels since mid-2001. The S&P 500 slid 10.79, or 0.85 percent, to 1,257.46, and the Nasdaq fell 23.64, or 1.04 percent, to 2,239.37.

Bonds advanced, with the yield on the 10-year Treasury note falling to 4.41 percent from 4.43 percent late Friday. The dollar was mixed against other major currencies in European trading, and gold prices were little changed.

Forecasts for mild weather in the Northeast took crude futures lower. A barrel of light crude dropped $1.35 to settle at $57.36 on the New York Mercantile Exchange.

This week brings a spate of key economic reports on gross domestic product growth, spending and employment. Closely watched data that could move the market are scheduled for release each day and could also be the reason for Monday’s selloff, said Rick Pendergraft, an equity trader with Schaeffer’s Investment Research.

Declining issues led advancers by 11 to 5 on the New York Stock Exchange, where preliminary consolidated volume came to 2.03 billion shares. Preliminary consolidated volume was 722 million shares on Friday, when the markets closed early; on Wednesday, the last full day of trading, volume was 2.01 billion shares.

The Russell 2000 index of smaller companies was down 12.08, or 1.77 percent, at 671.50.

Overseas, Japan’s Nikkei stock average surged 1.37 percent. Britain’s FTSE 100 lost 0.84 percent, Germany’s DAX index fell 0.34 percent, and France’s CAC-40 was lower by 0.55 percent.