By Sruthi Shankar
(Reuters) – Wall Street opened lower on Monday, pulling back from a strong rally last week, as investors assessed the fallout of the first charges in connection with a probe into possible Russian meddling in the 2016 U.S. presidential election.
Paul Manafort, a former campaign manager for Trump, surrendered to federal authorities in connection with the investigation, according to reports.
“The market could be awakening to the fact that the political situation is coming back into focus … that could cap the market from moving higher,” said Peter Cardillo, chief market economist at First Standard Financial.
The ongoing investigation and its outcome could distract the administration from its efforts to overhaul the tax system and push through other policies, analysts have said.
Investors also awaited the announcement on the nomination of the new Federal Reserve chief, expected later this week. Trump is leaning toward nominating Fed Governor Jerome Powell, considered a moderate, to be the next Fed chair, sources told Reuters.
“This is a very heavy week in terms of macro news. While earnings continue to pour in, majority of the market is now going to focus on the Fed,” Cardillo said.
A Commerce Department report showed consumer spending recorded its biggest increase in more than eight years in September, but underlying inflation remained muted.
With the third-quarter earnings season more than half-way through, nearly 74 percent of the S&P 500 companies that have reported earnings so far have topped profit expectations, compared with 72 percent overall the past four quarters.
Blockbuster tech earnings last week powered Nasdaq to its best day in nearly a year. Apple and Facebook are among the top tech companies reporting this week.
At 9:55 a.m. ET, the Dow Jones Industrial Average was down 40.68 points, or 0.17 percent, at 23,393.51, and the S&P 500 was down 3.61 points, or 0.139864 percent, at 2,577.46.
The Nasdaq Composite, however, was up 13.63 points, or 0.2 percent, at 6,714.89, helped by Apple and Facebook.
Apple rose 1.8 percent as GBH Insights analyst Daniel Ives raised his pre-order demand expectations for the iPhone X to 50 million units from 40 million.
Seven of the 11 major S&P indexes were lower, led by losses in healthcare and consumer discretionary stocks.
General Motors dipped 3.7 percent after Goldman Sachs downgraded the company’s stock to “sell” from “neutral”.
Merck slipped 5.2 percent after the company said it withdrew an application for European use of its Keytruda cancer immunotherapy.
Advanced Micro Devices fell 4.8 percent after Morgan Stanley downgraded the stock to “underweight” from “equalweight”.
Declining issues outnumbered advancers on the NYSE by 1,417 to 1,226. On the Nasdaq, 1,424 issues fell and 1,071 advanced.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty)
