Markets opened slightly lower on Wall Street on Monday in a modest pullback from record levels as investors held off from making big plays ahead of the start to earnings season.
At midday the Dow Jones industrial average fell 0.39 percent and the Standard & Poor's 500-stock index was down 0.47 percent, while the Nasdaq composite index dropped 0.70 percent.
Cyclical stocks, tied to the pace of economic growth, were among the weakest of the day. Industrial shares fell 0.6 percent while the only sectors in positive territory were defensive groups like utilities and telecom.
A strong June jobs report lifted Wall Street to multiple records on Thursday, the final trading session before the Independence Day holiday, with the Dow closing above 17,000 for the first time.
Dozens of major companies are scheduled to report quarterly results next week, including many that are Dow components. Investors see a slight chance that profits for S.&P. 500 companies could return to double-digit growth for the first time in nearly three years.
"This earnings season has a lot of pressure on it, since we need to see significant revenue growth to offset weakness in the first quarter," said Oliver Pursche, the president of Gary Goldberg Financial Services in Suffern, N.Y. However, "we're unlikely to see any big moves until we start to see big names report."
The CBOE volatility index is down almost 25 percent this year, closing on Thursday at its lowest level since February 2007. The so-called "fear index" is at extremely low levels from a historical perspective, which has some investors concerned that markets are not factoring in issues that could derail the rally.
While the June payroll report, which showed the unemployment rate falling to its lowest level since September 2008, confirmed expectations that the economy had bounced back in the second quarter, some analysts speculated that it also meant the Federal Reserve might raise interest rates earlier than had been previously anticipated.
In corporate news, Bed Bath & Beyond shares edged slightly lower after the company authorized a $2 billion stock buyback program.
BioDelivery Sciences International rose about 11.5 percent after the company said its experimental pain drug, which it made with Endo International, was found effective in a late-stage trial.
GT Advanced Technologies fell 13 percent in heavy trading after UBS removed the company from its United States key calls list.
Archer Daniels Midland said it would buy the food flavors and specialty ingredients company Wild Flavors for about $3 billion. Shares in A.D.M. were up 1.36 percent.
Overseas, weak manufacturing data from Germany took the wind out of European shares and the euro, but for the most part moves were minor and there was little sign of any nervous reaction in the region's bond markets.
Data on German industrial output soured sentiment in European markets as it fell 1.8 percent in May, its biggest drop in more than two years, confounding expectations of a steady reading from Europe's manufacturing powerhouse.
Germany's DAX fell 0.2 percent after the report.
France's CAC 40 share index was down 0.4 percent after the pharmaceutical company Sanofi warned that currency effects would lower its earnings. A drop in Vienna's stock index also weighed on European shares for a second day, as it tumbled 1.1 percent after falling 3 percent on Friday over concerns about risks to Austrian banks' business in Eastern Europe.
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