S&P 500 Slips from Highest Level in Five Years

On Wall Street, stock prices fell on Monday after reaching their highest levels in five years on Friday, as investors remained cautious ahead of the start of the quarterly earnings season for companies.

The Dow Jones index weakened by 50 points, or 0.38 percent, to 13,384 points, while the S&P 500 index slipped 0.31 percent to 1,461 points, and the Nasdaq index fell 0.09 percent to 3,098 points. After the S&P 500 index reached its highest level in five years on Friday, thanks to the avoidance of the ‘fiscal cliff’, caution prevailed in the market at the beginning of the new week.

– This is a slight withdrawal of investors from riskier assets ahead of the earnings season, in which nothing spectacular is expected – says Larry Peruzzi, director at Cabrera Capital Markets.

The earnings announcement season for companies begins on Tuesday with Alcoa’s report after the market closes. The stock price of the largest U.S. aluminum producer fell 1.7 percent yesterday.

According to a Thomson Reuters survey, estimates for the performance of companies in the S&P 500 index in the fourth quarter are slightly better than the results in the third quarter, but significantly weaker than they were a few months ago. For example, in October, analysts estimated that corporate earnings in the fourth quarter would rise by an average of 9.9 percent.

However, given a series of warnings from companies about deteriorating business conditions globally, in the latest Reuters survey, analysts expect that earnings for companies in the S&P 500 index in the last quarter of last year increased by 2.8 percent, while revenues rose by 1.9 percent.

Yesterday, bank stocks came under pressure after news that the 10 largest U.S. banks agreed to pay a total of $8.5 billion to end a government investigation into whether there were irregularities in foreclosures on clients’ homes during the financial crisis.

The KBW bank sector index weakened by 0.3 percent. However, this was not the sector with the largest decline. The S&P services sector index fell by 1.1 percent, and the energy sector by 0.8 percent.

Investor caution is indicated by the thin trading volume. On Wall Street, NYSE MKT, and Nasdaq, about 4.8 billion shares changed hands yesterday, while last year the average daily volume was 6.4 billion.
And on European exchanges, stock prices also fell yesterday. The London FTSE index weakened by 0.41 percent to 6,064 points, while the Frankfurt DAX slipped by 0.56 percent to 7,732 points, and the Paris