Stocks closed lower Monday as cautious comments from GM and Pfizer snapped the Dow's seven-day winning streak.
"We've seen a really good move in the market and a little consolidation is healthy," said Bill Nichols, managing director of equity trading for Bear Stearns. "After being higher so much, a little profit-taking is only natural."
The Dow Jones Industrial Average snapped a seven-day winning streak, falling for just the second time in the last 17 sessions. The benchmark index closed last week up 2.8%, powered by Friday's 153-point gain following better-than-expected quarterly earnings reports. The S&P 500 and the Nasdaq also fell slightly.
General Motors fell after Vice Chairman Bob Lutz said the weak U.S. mortgage market has impacted auto sales as car buyers' budgets are stretched due to the housing slowdown.
Pfizer shares declined, which also weighed on the Dow. The stock fell more than 2% after Prudential downgraded the stock to "neutral" from "overweight" after the world's largest drugmaker issued a weaker than expected 2007 earnings forecast last Friday.
"While the stock may be at the bottom, it is unclear to us what will lift it from here, short of something revolutionary," said Prudential analyst Tim Anderson.
The utilities sector the lone bright spot among the 10 sectors in the S&P 500 while telecom services and financial stocks led sector decliners. Declining stocks slightly outnumbered advancing shares on the New York Stock Exchange.
MedImmune shares jumped more than 17% after European pharmaceutical company AstraZeneca agreed to buy the drugmaker for $15.6 billion in cash.
Delta Air Lines posted a narrower first-quarter loss as the bankrupt carrier benefited from higher fares and lower costs. The third largest U.S. airline reported a loss of $130 million compared with a loss of $2.1 billion in the year-ago quarter. Shares of rival UAL , the parent of United Airlines, fell 2% ahead of a quarterly earnings report set for Wednesday.
IBM was the best Dow performer with a modest gain of 0.7% after Lehman Brothers upgraded the stock to "overweight" from "equal weight," saying 2008 earnings estimates look low because of higher software sales and lower overseas labor costs.
Hasbro posted a profit that trounced expectations, on strong sales of board games and Littlest Pet Shop and Playskool toys.
New York light sweet crude futures rose 2.8% to $65.89 a barrel, on concerns about escalating violence in Nigeria, the eighth-largest oil exporter, following presidential elections.
Treasury prices turned higher, pushing yields down.
Stocks End Mixed in Europe, Asia
European stock markets ended mixed on Monday as merger activity remained strong.
The CAC-40 closed modestly lower in Paris, the Frankfurt DAX ended slightly below the unchanged mark while the the FTSE-100 closed higher in London.
Barclays said Monday it will acquire ABN Amro for $91.16 billion in the largest takeover in financial services, capping a month of negotiations to create a global banking giant and to prevent the splintering of the Netherlands' biggest bank. As part of the deal, ABN announced it is selling its U.S. unit LaSalle Bank to Bank of America for $21 billion in cash.
Swiss drugmaker Novartis posted a net profit increase of 11% in the first-quarter, to $2.171 billion, beating expectations due to strong sales of its flagship drugs.
Nestle, the world's largest food company, also beat first-quarter expectations with a 6.4% increase in sales to 24.25 billion $20.11 billion.
Asian markets were mixed Monday, with benchmark indexes in South Korea and China hitting records.
Tokyo's Nikkei 225 Average ended the session flat as investors erred on the side of caution ahead of earnings announcements.
The Kospi Index closed in Seoul at yet another new record as shipbuilders and steelmakers such as POSCO surged amid expectations for solid profits, but Kookmin Bank dropped on an analyst downgrade.
Hong Kong stocks closed higher but shares of China Mobile came under pressure after profit margins came in below expectations. But mainland stocks were strong as the Shanghai Composite Index closed up 2%.