Wall St flat near record levels, Merck falls

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks were little change on Monday as investors found few reasons to keep pushing shares higher after the S&P 500 climbed to a series of records on expectations for continuing Federal Reserve stimulus.

The S&P 500 index hit the latest all-time high on Friday, but further gains may be harder to come by given the market's rapid advance this year. Corporate earnings could serve as a catalyst, with investors especially looking to Apple Inc's results after the market closes, though the season has been mixed thus far.

The gains this year have largely come from expectations that the Fed would not slow its stimulus policies for several months. The Fed's policy-making committee will meet Tuesday and Wednesday and, according to analysts, is extremely unlikely to alter its policies.

 

"In order for the ball to keep rolling on Wall Street, we'll need to know that the Fed's stimulus will stay in place, giving us abundant liquidity," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"In the meantime, we've gone something like 500 days without a 10 percent correction, and at some point earnings will have to catch up with current valuations."

Third-quarter results have been mixed, with revenue growth a concern in particular.

Dow component Merck & Co fell 2.2 percent to $45.52 after reporting a decline in sales of its Januvia diabetes treatment, raising concerns about growth prospects for its biggest product.

Biogen Idec posted a rise in its third-quarter earnings and boosted its full-year earnings and revenue outlook. Shares rose 2.3 percent to $257.76.

The Dow Jones industrial average was down 17.60 points, or 0.11 percent, at 15,552.68. The Standard & Poor's 500 Index was down 0.02 points, or 0.00 percent, at 1,759.75. The Nasdaq Composite Index was down 3.42 points, or 0.09 percent, at 3,939.94.

The S&P 500 is up about 23 percent this year, just shy of the 23.5 percent gain in 2009. Surpassing the 2009 advance would give the index its biggest annual gain in a decade.

Much of those gains have come recently, with both the Dow and S&P 500 posting their third straight week of gains last week. The Nasdaq has climbed for seven of the past eight weeks while the Russell 2000 index of small cap stocks <.TOY> registered its eighth week of gains last week, its longest streak since 2003.

Given the length of the rally, weak corporate results could trigger a pullback. Apple, the largest U.S. company by market cap, reports after the market closes and investors are looking for clues into demand for the company's low-cost iPhone.

Tech companies have done well this season, with bellwethers like Microsoft and Amazon.com rallying after results last week.

Based on the latest Thomson Reuters data, S&P 500 earnings are expected to have risen just 3.4 percent in the third quarter, with 69 percent of companies reporting earnings above analysts' expectations. Revenue growth is seen at 2.2 percent for the quarter, with just 54.2 percent beating sales estimates, below the long-term average of 61 percent.

Cable television network AMC Networks Inc on Monday said it agreed to buy Chellomedia, the international content unit of Liberty Global Inc , for about $1.04 billion. AMC fell 2.6 percent to $68.51 while Liberty was flat at $80.20.

Mosaic Co agreed to buy CF Industries Holdings Inc's phosphate mining and manufacturing business for $1.2 billion in cash. Shares of CF jumped 4 percent to $217.96 while Mosaic was up 1.7 percent at $46.74.

Shares of Consol Energy Inc dropped 2.4 percent to $37.27 after the company said it would sell five West Virginia coal mines for $850 million in cash, as well as $184 million in future royalty payments for coal reserves.

In the latest economic data, pending home sales slumped 5.6 percent in September, a rate that was far steeper than expected and the biggest drop in more than three years.

While markets were little impacted by the report, it did hit housing stocks. Beazer Homes fell 1.3 percent to $19.29 while Toll Brothers was off 1.4 percent to $33.35.

(Editing by W Simon, Kenneth Barry and Nick Zieminski)