Stocks on Wall Street fell on Monday, as investors appeared wary at the outset of a week packed with data and central bank meetings.
In midday trading, the Standard & Poor’s 500-stock index fell 0.45 percent, the Dow Jones industrial average was 0.33 percent lower and the Nasdaq was off 0.41 percent.
Investors are looking ahead to Wednesday’s statement from the Federal Reserve for clarity on when the Fed will begin to pare its $85 billion in monthly bond purchases. According to a poll of economists conducted by Reuters on July 22, the Fed is most likely to begin tapering its quantitative easing stimulus in September.
Until recently, investors have embraced average or weak data with the expectation that the Fed will continue to stimulate the economy and put a floor on stock prices. The prospect of a slightly less accommodative Fed in the near future, however, has increased the market’s need for stronger economic data.
The National Association of Realtors reported on Monday that the number of Americans who signed contracts to buy homes fell slightly in June from May, signaling that sales could stabilize in the next few months.
Its seasonally adjusted index for pending home sales declined 0.4 percent, to 110.9, in June. The May reading was also revised lower by a percentage point, to 111.3, but it was still the highest level since December 2006.
Data on the industrial sectors is also scheduled in the first half of the week, followed by gross domestic product for the second quarter on Wednesday and the closely watched jobs report on Friday.
On the earnings front, the hotel, energy and financial services conglomerate Loews Corporation posted an increase in second-quarter profit, as revenue from its insurance arm, CNA Financial, increased nearly 13 percent. Its shares rose slightly in early trading.
“Earnings have been good so far, but they have come in low-quality,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. “We haven’t really seen margin expansion or a lot of revenue growth and that can keep a lid on the markets in the short term.”
Halfway through earnings season, 67.6 percent of S.&P. 500 companies have beaten analysts’ expectations for profit, in line with the 67 percent average of the last four quarters. About 56 percent of the companies have beaten revenue expectations, more than the 48 percent average of the last four earnings seasons but below the historical average.
Shares in Wynn Resorts were up 0.24 percent in midday trading after the casino developer reported second-quarter results.
Merger activity could give equities support as big deals show that large investors see value in the market.
On Monday, the American drug maker Perrigo agreed to buy the Irish drug company Elan in a deal valued at $8.6 billion. Shares in Elan rose were 4.5 percent higher, at $15.60, at noon.
Shares in the advertising sector climbed after Publicis and Omnicom announced on Sunday that they would merge, as investors bet the deal would create an opening for rivals to lure defecting clients and potentially lead to more deals.
The merger also could bring rival accounts like Coca-Cola and PepsiCo under one firm. Omnicom shares gained more than 6 percent in early trading.
Hudson’s Bay, the operator of the department store chains Lord & Taylor in the United States and The Bay in Canada, said it would buy Saks Inc. for $16 per share. Shares in Saks gained 3.6 percent, to $15.86.
A fall in bank stocks, caused by speculation that Barclays might have to raise capital, weighed on European equities on Monday, causing an earlier increase in the markets to fizzle out.
The Pan-European FTSEurofirst 300 index closed flat at 1,205.18 points, while the euro zone’s blue-chip Euro STOXX 50 index slipped 0.1 percent, to 2,738.22 points.
Banking was the worst-performing European equity sector, as the British lender Barclays declined by 4 percent after the bank was hit by expectations that it might have to embark on a £4 billion rights issue in order to meet tougher British rules on capital requirements.
With investors bracing for another round of disappointing economic news from China, the world’s No. 2 economy after the United States, Asian markets have been generally weaker.
Japan’s Nikkei dropped 3.3 percent, to a four-week low of 13,661.13 points, as those jitters were compounded by a stronger yen and concerns that plans to increase the country’s sales tax — Japan’s most significant fiscal reform in years — could be watered down.
Hong Kong’s Hang Seng was also weaker, falling 0.54 percent, to 21,850.15 points, while the Kospi in South Korea was off 0.57 percent, at 1,899.89.