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US STOCKS-Wall St slips after four-week rally

Published 08/10/2009, 03:26 PM
Updated 08/10/2009, 03:30 PM
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* Investors' eyes on Fed meeting and data * Research in Motion falls 5 pct after UBS downgrade * Dow off 0.5 pct; S&P 500 down 0.6 pct; Nasdaq off 0.6 pct (Updates to late afternoon, changes byline)

By Rodrigo Campos

NEW YORK, Aug 10 (Reuters) - U.S. stocks fell on Monday as investors booked profits following a four-week rally that took the broad S&P 500 index to a 10-month high on Friday.

The decline comes ahead of a plethora of economic data due this week, including the Federal Reserve's statement on interest rates and the state of the economy, as well as government figures for monthly retail sales.

Materials companies' stocks took a big hit, with the S&P materials index down 1.7 percent. AK Steel Holding fell 4.4 percent to $20.37 while Nucor lost 4.3 percent to $47.04.

"This drop is probably a lack of buying interest more than selling pressure," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.

He said investors are hesitant to buy ahead of all the economic data expected this week.

The Dow Jones industrial average dropped 50.56 points, or 0.54 percent, to 9,319.51. The Standard & Poor's 500 Index fell 5.88 points, or 0.58 percent, to 1,004.60. The Nasdaq Composite Index lost 12.65 points, or 0.63 percent, to 1,987.60.

The U.S. dollar's gain against major currencies weighed on commodity prices because it usually curbs investors' appetite for raw materials denominated in the greenback. U.S. oil futures settled at $70.60 a barrel, down 0.5 percent, while New York copper slipped from a 10-month high.

The retail group was a weak performer in Monday's session, with Best Buy down 5.8 percent at $37.44 after Goldman Sachs downgraded the electronics retailer to "neutral."

The S&P Retail index dropped 2.9 percent.

The CBOE Volatility Index rose 2.7 percent. Earlier, it was up 3 percent -- its biggest percentage jump in two weeks as investors positioned themselves for a traditionally bumpy September. The widely watched VIX is a 30-day risk forecast priced off of S&P 500 index options.

"You are starting to see traders anticipate defensive moves going into September, which is typically a cyclical negative for the market," Springer said.

On Nasdaq, BlackBerry maker research in Motion was one of the top drags, down 4.9 percent at $73.30. The stock was down for a third-straight session after UBS downgraded it to "neutral" from "buy" on concerns that Verizon Wireless, one of RIM's largest customers, may launch an iPhone.

On the upside, McDonald's reported stronger-than-expected July sales, sending the Dow component's stock up 1.8 percent to $56.20 on the New York Stock Exchange.

Fellow Dow component Merck & Co rose 1.9 percent to $30.66 after the drugmaker was reinstated by Goldman Sachs with a "buy" rating, and added to its Americas conviction buy list. (Editing by Jan Paschal)

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