Stocks fell moderately on Monday as investors took a break after four weeks of gains that brought the market to record highs.
Energy companies fell more than the rest of the market as the price of oil took another turn lower. Yahoo fell after Verizon announced it would buy most of Yahoo’s internet businesses for $4.83 billion.
The Dow Jones industrial average lost 77.79 points, or 0.4 percent, to 18,493.06. The Standard & Poor’s 500 index lost 6.55 points, or 0.3 percent, to 2,168.48 and the Nasdaq composite lost 2.53 points, or 0.1 percent, to 5,097.63.
It’s common for a market that has run up quickly to retreat. With the slow summer trading season and lack of economic news, traders say there are few reasons to be buying the market right now.
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“This is a broad, but benign, sell-off,” said Ryan Larson, head of U.S. equity trading for RBC Global Asset Management.
Larson pointed out the recent price-to-earnings ratio on the S&P 500, or the amount of money that investors are paying for each dollar of earnings, which was trading at nearly 20. That’s far above the 14 to 16 times that investors are typically comfortable with.
“It’s another reason why the market looks fatigued at the moment,” he said.
This week, while heavy on individual company earnings, is light on economic data. Later this week the Bank of Japan and Federal Reserve will hold policy meetings. With Japan’s economy barely growing, economists are speculating about whether its central bank may push more stimulus, likely lowering its interest rate further into negative territory when it announces its decision on Friday.
The U.S. economy is in better shape than other advanced economies, but expectations are that the Fed will hold interest rates steady and look to raise interest rates later this year. Securities that bet on which way the Fed will move interest rates show only a 10 percent chance of a rate increase this week. The Fed’s two-day meeting starts Tuesday.