Investing.com – Wall Street traded lower on Monday, the first session of the fourth quarter, as investors took profits after solid gains in the June to September period, despite a healthy reading on manufacturing activity.
At 11:40AM ET (15:40GMT), the Dow Jones fell 78 points, or 0.43%, while the S&P 500 lost 11 points, or 0.51%, and the tech-heavy Nasdaq Composite traded down 19 points, or 0.35%.
On Friday, the S&P 500 and Dow closed with quarterly gains 3.31% and 2.11%, respectively, in what was a four-quarter winning streak. Meanwhile, the Nasdaq jumped 9.69% for the June to September period, managing to break a two-quarter slide.
Investors appeared cautious to continue the gains on Monday with many factors in their crosshairs, not the least of which will be Friday’s nonfarm payrolls.
Sterling took a beating on Monday after British Prime Minister Theresa May confirmed that the U.K. would trigger Article 50 by the end of March 2017.
Article 50 is the formal procedure necessary to officially announce its June 23 decision to leave the European Union (EU), known as a Brexit, and begin forging new trade arrangements.
Market participants were also keeping a close eye on Deutsche Bank (DE:DBKGn) while waiting for confirmation of reports that the original $14 billion fine from the U.S. Department of Justice (DoJ) would be reduced to $5.4 billion.
With the German stock market closed for a holiday on Monday, the bank's U.S. shares (NYSE:DB) were down nearly 2% after having jumped last Friday on the unconfirmed reports that the DoJ punishment would be much less than expected.
Stateside, the fact that manufacturing activity in the U.S. returned to expansion in September, rising more than expected, was only enough to pare Monday’s losses.
On the downside, construction spending unexpectedly fell for a second consecutive month in August, hitting an eighth-month low and causing concern over the reading for third quarter economic growth.
In company news, more buyout rumors sent shares of Twitter Inc (NYSE:TWTR) more than 2% higher on Monday.
Late Friday, Bloomberg cited sources saying that Google (NASDAQ:GOOGL) had hired Lazard Ltd to explore a possible purchase of the social media company.
The move could pit Alphabet’s largest subsidiary against other potential suitors such as Salesforce.com (NYSE:CRM), Walt Disney Company (NYSE:DIS) or Microsoft (NASDAQ:MSFT).
In other M&A news, Janus Capital Group Inc (NYSE:JNS), home of bond guru Bill Gross, and U.K.-based Henderson Group Plc (LON:HGGH) announced a merger that will create a investment firm managing more than $320 billion in assets. Shares of the American investment firm soared close to 14%.
Cabela's Inc (NYSE:CAB) jumped almost 15% on news that Bass Pro Shops would purchase the retailer for $65.50 a share, or $5.5 billion.
In other company news, Tesla (NASDAQ:TSLA) jumped more than 4% on Monday after posting a 70% increase in quarterly deliveries.
EBay (NASDAQ:EBAY) fell more than 1% on concern that Facebook’s (NASDAQ:FB) announcement of a “Marketplace” section could increase competition for the online commerce company.
Amid a slew of reports, General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) tracked higher despite reporting respective declines of 0.6% and 7.7% in their U.S. automobile sales in September. Their numbers beat Reuters’ consensus that had expected sales to decrease 2.3% and 8.5%, respectively.
Meanwhile, oil prices traded with slight gains on Monday, far from session highs of more than a 1% advance, as investors reevaluated the global supply glut.
Despite solid gains up to the U.S. market open, crude’s rise was pared as market participants began to note that U.S. producers could respond to any action by OPEC to support market prices by increasing their own production.
Morgan Stanley pointed out that when calendar 2017 pricing rises into the low-to-mid 50s, as it is doing now, producer hedging rises materially.
“Already we are seeing significant producer flows, which early estimates suggest could be the highest we have seen all year,” these analysts said in a note to clients released early Monday.
“Any serious increase in US activity could make OPEC producers more nervous in Vienna,” they warned.
U.S. crude oil futures gained 0.33% to $48.40 by 11:43AM ET (15:43GMT), while Brent oil rose 0.62% to $50.50.