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Tech stocks lead
broad declines
U.S. stocks fell after a report on new home sales added to speculation that the Federal Reserve may increase interest rates because of an improving economy.
Computer-related stocks led the decline, including Microsoft Corp., which on Friday had its biggest rally in almost two years after reporting higher-than-forecast sales. More than three-fourths of the members of the Standard & Poor's 500 Index that have posted quarterly results have beaten analysts' estimates.
"We're having a great year on the earnings front," said Richard Jandrain, chief investment officer at Banc One Investment Advisors, which oversees $187 billion in Columbus, Ohio. "The fear, though, is that the economy is too strong, the Fed is going to have to pull the punch bowl away and that we'll see a big move up in interest rates."
The Standard & Poor's 500 Index shed 5.28, or 0.5 percent, to 1,135.53, its first drop in four days. The Nasdaq Composite Index fell 13, or 0.6 percent, to 2036.77. The Dow Jones Industrial Average lost 28.11, or 0.3 percent, to 10,444.73, erasing its gain for the year.
The price of the Treasury's 10-year note closed up 18 point, while its yield fell to 4.44 percent from 4.45 percent Friday. Two-year Treasury notes were unchanged and yielded 2.23 percent.
Seven stocks fell for every four that rose on the New York Stock Exchange. Almost 1.3 billion shares changed hands on the Big Board, 12 percent below the average for the past three months.
Microsoft, whose shares climbed 6.1 percent on Friday, shed 30 cents to $27.24. Intel Corp., the world's biggest semiconductor maker, lost 38 cents to $27.15. An index of the computer-related shares in the S&P 500 lost 1.2 percent, the biggest drop among the benchmark's 10 industry groups.
The S&P 500, which rallied 26 percent last year, has fallen 1.9 percent since reaching a 23-month high on Feb. 11. Since then, more than half of the benchmark's members have posted quarterly results and 77 percent of them beat the average analyst estimate, according to a Thomson Financial survey.
Today, 15 S&P 500 companies were scheduled to report and 139 more will release first-quarter earnings through May 4, when the Fed meets to decide on the level of its target interest rate. The benchmark rate is at the lowest since 1958.
"I'm not surprised to see the market consolidating," said Peter Goldman, who helps manage $1 billion for Chicago Asset Management. "Investors right now are waiting to see when the Fed is going to bump rates up."
The Commerce Department said sales of new homes rose to a record 1.228 million annual rate in March, exceeding forecasts, as cheap financing and an improving job market persuaded Americans to invest in real estate.
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