Stocks closed mixed on Monday after a modest follow through rally from Friday's strong jobs numbers quickly fizzled as investors looked ahead to quarterly earnings season.
"I think with the next few days we're in a holding pattern waiting for earnings to appear," said Zachary Karabell, portfolio manager at Fred Alger Management.
The Dow closed higher for the seventh straight session, the longest winning streak since January 2006, but the blue chip index is up just 0.9% year to date.
The Dow Jones Industrial Average and the S&P 500 both registered small gains but the Nasdaq snapped its winning streak as the tech-heavy index closed down slightly. The S&P 500 and Nasdaq have fared a bit better in 2007, up 1.9% and 2.2%, respectively.
"I'm surprised the market is not up more than it is," Patrick Fay, director of equity trading at DA Davidson, told CNBC.com. "All the employment numbers were good but nobody had a chance to react to it on Friday."
Market pros were also bracing for quarterly earnings reports. Neil Wolfson, chief investment officer at Wilmington Trust, said higher workers' salaries have burdened profit margins and resulted in a slowdown in earnings growth.
"We expect earnings season to be below what we have seen," Wolfson said. "The double-digit earnings growth that have been quarter after quarter for the last three years are over."
Alcoa will release first-quarter earnings on Tuesday and will be the first of Dow 30 companies to report.
Breadth was slightly negative on Monday with declining shares edging out advancing stocks on the NYSE. Six of ten S&P 500 sectors moved higher, led by strong gains for basic materials stocks. Utilities performed well but telecom stocks lagged the overall market.
Intel was the biggest percentage gainer among the 30 Dow components after rival Advanced Micro Devices cut first-quarter revenue guidance and announced plans to reduce 2007 spending by about $500 million.
New York light crude futures tumbled 4.4%, falling below $62 a barrel, as oil prices continued to drop following the release of 15 British sailors by Iran last week.
Dow Chemical rose following reports that an investment consortium is preparing a $50 billion buyout bid for the company. CNBC's David Faber said his sources believe a buyout is doubtful.
Transportation stocks jumped after regulatory filing revealed that billionaire investor Warren Buffett accumulated almost an 11% stake in Burlington Northern Santa Fe.
Buffett's Berkshire Hathaway has also bought smaller stakes in two other railroads, reported CNBC's Liz Claman, but declined to provide details. Claman says Berkshire has invested about $700 million in one company and a slightly smaller amount in the other.
American Home Mortgage burdened financial stocks after the company cut first quarter and full-year earnings projections by more than 25%. The company said it has stopped offering some types of Alt-A mortgages because of the high cost of delinquencies on those loans.
Shares of Vonage Holdings fell after a federal judge ruled that the company can continue servicing its existing 2.2 million customers, but won't be able to seek new ones. A jury in the case previously found that Vonage had violated technology patents held by Verizon.
Last Friday the Labor Department said payrolls rose by 180,000 in March, well above consensus estimates, while the rate of unemployment unexpectedly fell to a five-month low of 4.4%.
"The employment number that came out on Friday caused a lot of uncertainty and did not provide a clear investment direction," Richard Cripps, managing director of portfolio strategy at Stifel Nicolaus, told CNBC.com. "The expectation was there would be evidence for the Fed to cut, and the number that came out on Friday was anything but that."
Treasury prices rose, sending yields lower.
Asia Sees Broad Market Gains
Asian markets rallied on Monday, with Japan and South Korea both closing with gains of more than 1% as exporters rose after surprisingly positive U.S. jobs data sparked hopes of increased sales to their biggest market. Japanese exporters were supported by the strong U.S. dollar, which traded near a fresh six-week high against the Japanese yen following the U.S. employment data.
The Nikkei 225 Average ended in Tokyo at its highest close in almost six weeks as Sony and other exporters rose after strong U.S. jobs data eased worries about a key market for Japanese goods and lifted the dollar against the yen. Shares of Pentax jumped more than 9% after Hoya said on Friday it would make a tender offer for the camera maker that placed a higher premium on the shares than its previously planned share swap ratio.
South Korea's Kospi Index closed above 1,500 for this first time ever as builders such as Daewoo Engineering rallied after government data showed a jump in overseas orders, a key driver of earnings in the sector.
Singapore's Straits Times Index closed sharply higher for the third straight session, led by United Overseas Bank, after a strong U.S. jobs report eased concerns over the health of the world's largest economy.
China's benchmark Shanghai Composite Index also closed at a record high for the sixth straight day as bank stocks began to recover from Friday's weakness. Banking stocks were weak on Friday in a knee-jerk reaction to an unexpectedly early hike in bank reserve requirements.
Markets in Hong Kong, Australia and Europe were closed on Monday in observance of Easter.