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Stocks End Lower Amid Profit-Taking

Stocks retreated Monday as investors took a breather after a four-week rally, capped by a better-than-expected jobs report on Friday.

The Dow Jones Industrial Average shed 32.12, or 0.3 percent, to close at 9,337.95. The Nasdaq lost 0.4 percent and the S&P 500 fell 0.3 percent, but held above the 1,000 mark.

After climbing for four straight weeks, major indexes are trading around their highest levels since November, when the meltdown began, so market pros said it's only natural that stocks were due for a pullback.

"We are in a mild profit-taking mode after a rally, and we are also nearing September, the historically worst month for stocks," Art Hogan, chief market analyst at Jefferies, told Reuters.

Retail stocks were mostly lower as investors cycled out of the sector after recent gains ahead of some key reports on the sector: The government's July retail sales and a slew of retailers' earnings, including Wal-Mart .

Wal-Mart shares bucked the sector trend, ticking higher, despite comments from JPMorgan that the retail giant won't see same-store sales growth for the second quarter as summer business was weak.

Macy's and JCPenney, which report earnings later in the week, were both down more than 3 percent.

Best Buy fell 5.3 percent after Goldman Sachs downgraded its rating on the electronics retailer to "neutral."

State Streetdeclined as the bank said in an SEC filing that its reserve for exposure to subprime "may not be sufficient."

Most of the banking sector followed State Street lower but Citigroup gained more than 2 percent. Bank of America and JPMorgan also advanced after a report showed U.S. banks are poised to make $38.5 billion from customer overdraft feesthis year and as they're also likely to benefit from all the new car buying that has resulted from the "Cash for Clunkers" program.

Speaking of clunkers, General Motors and eBay announced this morning that hundreds of GM dealers in California are going to start auctioning cars online.

Materials stocks fell 1.6 percent as a rise in the dollar clipped commodities-related stocks.

AK Steel Holding dropped nearly 5 percent.

Merck shares rose 1.7 percent after Goldman Sachs added the stock to its "conviction buy" list.

McDonald's reported its same-store sales rose 2.6 percentin July, helped by its new upscale coffee offerings. Its shares rose nearly 2 percent.

Hormel shares rose 5.8 percent after the maker of Spam and Jennie-O Turkey products raised its 2009 forecast amid strength in its refrigerated-food segment.

Microsoft is selling its digital-advertising firm Razorfishto French ad firm Publicis in a deal valued at $530 million.

Elsewhere in tech, Research In Motion shares skidded nearly 5 percent, its third-straight decline, after UBS downgraded its rating on the stock to "neutral" amid worries that Verizon Wireless, one of RIM's largest customers, might launch its own iPhone.

Volume was low in today's session, with about 1.09 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 8 to 7.

Investors are already looking ahead to a two-day Fed meeting, which begins Tuesday.

After Friday's jobs report showed the U.S. unemployment rate fell in July for the first time in 15 months, bets on the central bank raising interest rates by up to a quarter percentage point by year end increased to as high as a 46 percent chance from 34 percent shortly before the data, according to Reuters.

And, this week the U.S. Treasury will auction $75 billion in new government bonds, starting with three-year notes on Tuesday.

This Week:

TUESDAY: Two-day Fed meeting begins; wholesale trade; Treasury 3-year auction; Earnings from Applied Materials
WEDNESDAY: Weekly mortgage applications; international trade; weekly crude inventories; Treasury 10-year auction; Fed announcement; Earnings from Macy's
THURSDAY: Retail sales; weekly jobless claims; import/export prices; business inventories; Treasury 30-year auction; Earnings from Wal-Mart, Kohl's and Nordstrom
FRIDAY: CPI; industrial production; consumer sentiment; Earnings from JCPenney

Send comments to cindy.perman@nbcuni.com.