Stocks Fall on Profit Taking

The market will be watching Tuesday's existing home sales and consumer confidence reports for further signs of economic weakness

Major U.S. stock indexes fell Monday as traders took profits from last week's large rate cut-inspired gains, amid worries about strength of economy and housing, and if Federal Reserve interest-rate cuts will fuel inflation.

On Monday, the Dow Jones industrial average fell 61.13 points, or 0.44%, to 13,759.06. The broader S&P 500 index declined 8.02 points, or 0.53%, to 1,517.73. The tech-heavy Nasdaq composite index shed 3.27 points, or 0.12%, to 2,667.95.

Positive brokerage comments on Apple (AAPL), up 2.9% in Monday's session, and Microsoft (MSFT), up 1.5%, limited Nasdaq losses. Homebuilding stocks plunged, ahead of key housing data this week.

On the NYSE, 20 stocks fell in price for each 13 that rose. Nasdaq breadth was 19-11 negative.

Monday's calendar was clear of major economic news, though markets were still feeling the effects of the Federal Reserve's decision to cut interest rates last week. Traders were uncertain over how the market will react if Tuesday's existing home sales and consumer confidence come in as weak as economists are expecting.

"The markets look to remain volatile in the aftermath of the [Fed's] decision as they sort out the implications for global growth, inflation, as well as the policy course for G7 central banks," wrote Kim Rupert of Action Economics.

Oil prices moved lower on Monday, giving back some of their recent gains. November crude oil fell 67 cents in New York trading to $80.95 per barrel despite published weekend speculation that crude is headed to $100 in the near future. October heating oil fell 2.56 cents to 223.06 cents and Oct. reformulated gasoline shed 3.11 cents to 208.34 cents on profit taking from last week's gains.

Among stocks in the news Monday, Microsoft climbed aster a Wall Street Journal report said the company is in talks with Facebook Inc. about making an investment in the social-networking site that could value Facebook at $10 billion or more.

Union factory workers at General Motors (GM) went on strike after the United Auto Workers failed to reach an agreement with the automaker by an 11 a.m. EDT deadline.

Dell (DELL) says it will sell its products in China through a new partnership with China's largest consumer electronics retail chain.

Array Biopharma Inc. (ARRY) and Celgene Corp. (CELG) announced they will collaborate on the discovery, development and sale of new cancer and inflammation treatments.

C-Cor Inc. (CCBL) agreed to be bought by Arris Group ARRS for about $730 million.

Harman International (HAR) says it expects its fiscal 2008 sales to reach $4.1 billion and earnings to equal or exceed last year's numbers before merger related costs. The shares plummeted Friday amid news private equity funds at Goldman Sachs and Kohlberg Kravis Roberts pulled out of a planned buyout deal.

European indexes finished narrowly mixed on Monday. In London, the FTSE 100 index rose 0.14% to 6,465.9. Germany's DAX index fell 0.08% to 7,787.92. In Paris, the CAC 40 index edged lower by 0.14% to 5,692.49.

In Hong Kong, the Hang Seng index gained 2.74% to 26,551.94. The Shanghai composite index was up 0.56% to 5,485.01.

Treasury Markets

Treasuries achieved small gains Monday after a fairly quiet session, likely reflecting short covering after a large drop over the past two weeks. The 10-year note edged up 01/32 in price to 100-01/32 for a yield of 4.62%. The 30-year bond rose 05/32 to 101-30/32 for a yield of 4.87%.

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