Stocks ended at session lows on Monday following a late flurry of selling due to weakness in technology stocks, but the Dow ended the month with the biggest gains since December 2003.
"April has been a tremendous month -- we just gave back a little bit today," said Todd Leone, head of listed trading at Cowen and Company. "Typically, going into Monday we've seen some huge deals, and we didn't see any today, so the market had no interest to move higher."
"The market has been getting up there because the earnings have been so good," Leone added. "People are expecting good earnings now, so everything is starting to get priced into the market."
Heading into first-quarter earnings season, analysts had been predicting corporate earnings to fall for the first time in more than four years, but of the 326 companies in the S&P 500 to have already reported quarterly earnings, 65% have beaten analysts' consensus estimates, according to Thomson Financial.
"We've been making money in the last six weeks, so I do think we need a timeout," said Al Goldman, chief market strategist at A.G. Edwards. "The ability of the market to get above the (13,000) milestone shows that the economy is perking up."
Despite Monday's selloff, the Dow Jones Industrial Average has gained more than 700 points in April, ending with a monthly gain of 5.7%. The blue chip index hit an intraday record of 13,062.91 earlier in the session. The S&P 500 and the Nasdaq both closed the month with gains of 4.3%.
"I think going forward, while the outlook for the markets in a low-inflation environment is actually quite decent, I do think that we'll see slower profit growth alongside slower economic growth," said Jan Hatzius, chief U.S. economist at Goldman Sachs.
Basic materials, energy and information technology stocks led the markets to the downside while the telecom services sector was the lone S&P 500 sector to trade higher. Telecom was the the laggard in April, however, closing the month up 0.1%. Health care led sector winners in April with a 7.1% gain, followed by tech's 5.4% advance.
Verizon Communications, a Dow component, said earnings fell 8.4% in the first quarter but still managed to beat analysts' consensus forecasts amid revenue growth of 17%.
Proctor & Gamble shares were the best performing stock among the 30 Dow components as traders bid up the stock ahead of the consumer goods giant's quarterly earnings report set for Tuesday morning.
Shares of RadioShack rose sharply after the electronics retailer said its first-quarter profit surged on lower costs and improved margins. The company said net income jumped to 31 cents a share, above analysts' forecast of 14 cents.
Tyson Foods, the largest U.S. meat producer, reported a second-quarter profit versus a year-ago loss, due to better results in all of its meat segments. The company reported earnings of 19 cents a share, topping the 11 cents expected by analysts.
Delta Air Lines on Monday emerged from bankruptcy after a 19-month restructuring that resulted in $3 billion in annual financial improvements, the third-largest U.S. airline said. Shares of the company will begin trading on May 3 on the NYSE.
In the energy market, crude futures fell 1.1%, closing below $66 a barrel on the New York Mercantile Exchange. Crude oil, snapped a two-month winning streak with a small April decline of 0.2% but remains up 7.6% so far this year.
In economic news, the U.S. government said this morning that personal consumption expenditures (PCE) rose 0.3% in March while the monthly core rate was unchanged. The Fed's favored inflation barometer is now down to a year-over-year rate of 2.1%, reflecting a benign inflation outlook.
European, Asian Stocks Close Mixed
Germany's DAX and France's CAC-40 each closed higher but the FTSE-100 ended lower in London.
A Dutch court is expected to rule Thursday on whether ABN Amro will be able to sell its U.S. unit LaSalle to Bank of America . If the move is blocked, ABN's $88.5 billion deal to be bought by Barclays could fall through. In addition, Bank of America could ask for damages if the LaSalle deal is stopped, the Financial Times reported.
EADS, the parent company of Airbus, outlined a restructuring plan which included 10,000 European job cuts.
South Korea's Kospi Index ended flat as exporters such as Samsung Electronics fell after weak U.S. economic growth data raised concern about South Korea's No. 2 export market, but the Kospi still posted its best month since December 2005.
Hong Kong stocks fell as the Hang Seng Index lost ground on China's move to tighten credit growth, triggering a broad sell-off that hit mainland lenders and property shares hard.
Japan's stock market was closed on Monday due to a public holiday.