Factory orders can’t stem stocks’ fall

NEW YORK – Wall Street retrenched Monday, closing sharply lower as investors showed their cautious side and cashed in profits from the market’s best week in nearly five years. The Dow Jones industrial average fell more than 100 points.

Given the scope of last week’s gains, a pullback Monday wasn’t unexpected and perhaps reflected the normal ebb-and-flow of trading.

“It’s not like all of our problems went away because the market was up a couple of days last week. There are still some problems hanging over,” said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles. He said investors chiefly remained concerned about the labor market – given the huge effect of consumer spending on the economy – and on the feasibility of efforts to aid struggling bond insurers.

The session’s move lower continued even after a Commerce Department report showed that orders at U.S. factories rose.

While stocks showed little reaction to the factory orders report, Wall Street remains eager for any clues about the nation’s economic health. It continued to watch earnings reports trickle in; the readings could help indicate whether Wall Street last week carved the beginnings of a sustainable recovery. Last week, the Dow Jones industrial average jumped 4.39 percent, the Standard & Poor’s 500 index gained 3.75 percent, and the Nasdaq composite index advanced 4.87 percent.

Downgrades of credit card companies American Express Co. and Capital One Financial Corp. also weighed on stocks Monday.

The Dow fell 108.03, or 0.85 percent, to 12,635.16.

Broader stock indicators also lost ground. The S&P 500 index fell 14.60, or 1.05 percent, to 1,380.82, and the Nasdaq fell 30.51, or 1.26 percent, to 2,382.85.

The Dow is 10.8 percent below its record close of 14,164.53 from Oct. 9, but is up 8.6 percent from the 15-month lows it hit in January. The Federal Reserve’s second interest-rate cut in about a week helped boost stocks last week.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.64 percent from 3.60 percent late Friday.

The dollar slipped against most other major currencies, and gold prices also fell.

Light, sweet crude oil rose rose $1.06 to settle at $90.02 a barrel on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.36 billion shares.

The Russell 2000 index of smaller companies fell 7.04, or 0.96 percent, to 723.46.

Overseas, Japan’s Nikkei stock average rose 2.69 percent, Hong Kong’s Hang Seng index climbed 3.77 percent, and China’s benchmark but often-volatile Shanghai Composite index jumped 8.13 percent after reports indicated the economic effects from harsh winter storms in China might not have been as bad as feared.

Britain’s FTSE 100 fell 0.05 percent, Germany’s DAX index rose 0.46 percent, and France’s CAC-40 fell 0.09 percent.