Stocks closed lower on Monday as investors took profits in energy, financials, and technology, sectors that had been market leaders. The S&P 500, the Nasdaq, and the Dow Jones Industrial Average all closed just above their lows for the day.
The harshest selling was in energy stocks, which accelerated throughout the day as the S&P energy sector led decliners by a wide margin. Consumer nondurables and tech stocks also fell. Small gains were seen for basic materials and industrial stocks.
"The market hasn't gone anywhere in the last six weeks, it's getting a little irritating, said Todd Leone, head of listed trading at Cowen and Company, in an interview with CNBC.com "Not a lot of volatility going on, people are almost complacent. I'd like to see a selloff to shake some people out."
Leone said the markets have been a "mixed bag" recently. "Last Friday we had the first selloff in a while and so I think people are a little leery right now," he added.
New York light crude futures closed below $58 a barrel with a decline of 3.5%. Saudi Arabia's oil minister signaling that OPEC output levels don’t need to change. Natural gas futures declined 7.7%, the biggest one-day drop since December.
Shares of integrated oil giant Exxon Mobil fell, weighing on the Dow.
Marc Pado, chief market strategist at Cantor Fitzgerald, said stocks may also be more vulnerable to profit-taking as earnings season winds down.
"The leaders that we look to -- energy, the financials and technology -- are currently showing signs of weakness. That's never good when your leaders start to falter," Pado said.
But trading activity should step up in the middle of the week when Fed Chairman Ben Bernanke testifies before Congress, according to Bill Strazzullo, chief market strategist at Bell Curve Trading.
"This should be an important week, but the fireworks start on Wednesday. I think you're not going to see a whole lot until then," he said. Strazzullo said his firm is beginning to advise investors to book profits as stocks look more expensive.
"Our opinion is that the train is close to the end of the line, there may be one or two more stops," Strazzullo said. "We want to get off with our profits and then see how it plays out."
Shares of Home Depot were trading higher after the company said it was considering selling or spinning off its HD Supply business. Prudential Equity Group maintained an "underweight" rating on the stock.
Concerns about chip prices continued to burden semiconductor stocks in the wake of Micron Technology's warning Friday that memory chip prices could tumble 30% to 40% from the year-ago quarter.
On Monday morning, Merrill Lynch slashed fiscal 2007 earnings estimates for Micron to 22 cents from 86 cents on a GAAP basis. "We think that the NAND flash business, which Micron is attempting to ramp into the face of fierce competition from Samsung and Toshiba, is poised for the biggest round of price declines we've seen since the DRAM business rolled over in 1995."
Micron and partner Intel will spend $4 billion this year to manufacture Flash memory for MP3 players and other portable devices. Intel shares also traded lower on Monday.
Nvidia shares rose ahead of the graphics fourth-quarter earnings report, scheduled for Tuesday after the close of trading. Apple Computer rose after Citigroup upgraded the stock to "buy" from "hold," based on valuation.
Shares of real estate investment trusts, or REITs, declined for the third straight session following the industry's recent runup due to Blackstone's sucessful takeover bid for Equity Office Properties. Boston Properties, General Growth Properties, Simon Property Group and SL Green Realty all saw shares decline wider than 2% on Monday.
Homebuilding stocks were also weak in the wake of last week's warning from Toll Brothers. DR Horton, Pulte Homes and Lennar all closed lower.
Shares of Onyx Pharmaceuticals nearly doubled after the drugmaker and developmental partner Bayer announced positive late-stage clinical trial results for Nexavar, a treatment for liver cancer. Given the strong data, companies said they halted the trial to apply for U.S. Food and Drug Administration approval. Nexavar is already approved to treat kidney cancer.
Europe, Asia Markets End Lower
London's FTSE-100 declined despite Vodafone tying up an $11.1 billion takeover of Indian mobile operator Hutchison Essar.
The DAX ended lower as German holiday company Thomas Cook announced a merger with British package holiday companyMyTravel according to sources familiar with the situation.
The CAC-40 closed lower in Paris.
Asian stocks declined as Samsung Electronics and other tech shares under strain after Micron's warning. Japan's stock market was closed due to a holiday.
Shares of South Korean tech giant Samsung dropped to its lowest level in more than six months after Micron's recent warning as the Kospi Index ended almost 1% lower.
Hong Kong blue chips were also down as China Mobile dropped amid talk of a possible share placement.