NEW YORK — With the stock market in a bit of a news lull, investors decided to lock in some profits Monday.
Stocks fell modestly in the absence of major corporate or economic developments. Investors were cautious ahead of a two-day meeting of the Federal Reserve that starts today, and they’re waiting for retail earnings reports to offer some clues about consumer spending for the rest of the year.
Bond prices jumped as stocks fell. Monday’s moves in the stock and credit markets weren’t surprising after major stock indexes shot up 1 percent last week. The Dow Jones industrials fell 32 points, and all the major indexes each fell less than half a percentage point.
Investors want to see what the Fed has to say about how the economy is faring when its meeting ends Wednesday. It is widely expected the Fed will keep key interest rates steady at near zero, but Wall Street will be paying more attention to the economic assessment the Fed issues with its rate decision rather than any rate move itself.
“People want to see some words — some confidence — coming out of the Fed that the economy is improving,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.
Even if the Fed says such areas as housing and unemployment are making gradual improvements, traders have other worries. Banks still have billions of dollars in bad debts, and the Fed said in a snapshot of economic conditions at the end of July that activity in commercial real estate continues to weaken.
The Dow Jones industrial average fell 32.12, or 0.3 percent, to 9,337.95. The Standard & Poor’s 500 index fell 3.38, or 0.3 percent, to 1,007.10, while the Nasdaq composite fell 8.01, or 0.4 percent, to 1,992.24.
Investors are also bracing for a record $75 billion auction of debt this week that starts today.
Traders say the pause in the gains is welcome after the S&P 500 jumped 15 percent in four weeks and 49 percent from a 12-year low in early March. Major indexes ended Friday at their highest levels since last fall.
“Taking a break is a good thing or else we’d see valuations exceeding fundamentals a little bit too much,” said Jeffrey Phillips, chief investment officer at Rehmann Financial in Troy, Mich.
Analysts are still concerned about how and when policymakers will withdraw the enormous support the Fed implemented in the fall to prop up the financial system and the overall economy.
