New York – U.S. stocks closed lower Monday after positive earnings from Dow component Caterpillar were overshadowed by a weakness in the U.S. dollar and overnight selloffs in Asian markets.
Although investors drew some encouragement from a pullback in oil prices from recent peaks, they continued to ponder the future impact of elevated energy prices.
The Dow industrials closed 11.13 points lower to 11,336.32 after ending Friday’s session at their best level since January 2000.
The Nasdaq Composite Index dropped 9.48 points to 2,333.38, while the S&P 500 Index ended down 3.17 points at 1,308.11.
“Dollar weakness and the selloffs in Asian markets didn’t help,” said Peter Cardillo, chief market analyst at S.W. Bach. The Nikkei 225 lost almost 500 points overnight.
“People also are starting to focus on what higher energy prices will mean going forward.”
A decline in the U.S. dollar against the Japanese yen to a three-month low prompted some nervousness about how the move would affect U.S. economic growth.
Monday’s pullback in oil prices prompted some investors to lock in profits in the energy and oil-services sectors.
“We were overdue for some profit-taking after a great run,” said Alec Young, equity market strategist at Standard & Poor’s. “I think a lot of the raw-material plays were very overbought, so just a pullback there is enough to give the overall market some modest declines.”
Young said he thinks the concern about the falling U.S. dollar is somewhat overdone. The G7, the Group of Seven leading industrialized nations, called on China to allow greater flexibility in the value of its currency, prompting the Japanese yen to rally against the U.S. dollar.
By sector, semiconductors, brokers, gold stocks, and homebuilders were some of the biggest decliners.
Energy and oil services pulled back on the decline in crude, and airlines rallied as oil fell.
