Wall Street slips after rally as oil prices drop

NEW YORK (Reuters) - Stocks declined in light trading on Monday after a rally that drove the S&P 500 index to its highest level in nearly five years and as a sell-off in oil hit energy shares.

Stocks rode a four-day streak of gains last week to advance 1.9 percent, getting a charge from the Federal Reserve's new stimulus measures that could keep equities buoyed for months. The Fed's action followed a decision by the European Central Bank to support debt-ridden euro-zone nations by purchasing their debt.

Financials, which were among the biggest gainers late last week, were among sectors leading the day's decline. The S&P financial index <.gspf> fell 1.1 percent. Bank of America Corp shares lost 2.5 percent to $9.31.

An S&P index of energy shares <.gspe> fell 0.7 percent, slipping in sync with falling oil prices. Exxon Mobil shed 0.5 percent to percent to $91.83.

"We started off with a poor Empire manufacturing number, which is maybe justification for the Fed's move last week," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Factory activity in New York state contracted for a second month in a row in September, falling to its lowest level in nearly 3-1/2 years, according to a report on Monday from the Federal Reserve Bank of New York. A national manufacturing survey by an industry group earlier this month showed the sector contracted for a third month in August.

The Dow Jones industrial average <.dji> dropped 53.70 points, or 0.40 percent, to 13,539.67. The Standard & Poor's 500 Index <.spx> slipped 6.39 points, or 0.44 percent, to 1,459.38. The Nasdaq Composite Index <.ixic> fell 12.75 points, or 0.40 percent, at 3,171.20.

Yet volume was light on the New York Stock Exchange, the Nasdaq and the Amex, with about 3.4 billion shares in late trading. Many participants were out on Monday for the Jewish holiday of Rosh Hashanah. The year-to-date average closing volume is 6.5 billion.

The market's losses were limited by Apple Inc , which hit another all-time high of $699.54 with demand for its new iPhone 5 exceeding initial supply. The company booked 2 million orders in one day and pushed the delivery date for some pre-orders to next month. [ID:nL5E8KH9XU] In late afternoon trading, Apple's stock rose 0.9 percent to $697.62.

Brent and U.S. crude futures plunged in volatile trade on Monday as prices retreated after last week's surge on a boost from the U.S. Federal Reserve's launch of a stimulus program designed to support the economy. U.S. October crude oil futures lost more than 2 percent on Monday to $96.62 a barrel.

The S&P 500 materials index <.gspm> slid 1.4 percent, and led the S&P 500's decline. JP Morgan cut its ratings on a number of metals companies, including AK Steel , which dropped 5.8 percent to $5.53.

Investors also focused on turmoil overseas. Protesters in Afghanistan and Indonesia burnt U.S. flags and chanted "Death to America" on Monday in renewed demonstrations over a film mocking the Prophet Mohammad.

Israeli Prime Minister Benjamin Netanyahu warned that Iran would reach the brink of being able to build a nuclear bomb in just six or seven months.

Major Japanese companies, including Nissan and Honda, announced factory shutdowns in China on Monday and Japanese expatriates were urged to stay indoors ahead of what could be more angry protests over a territorial dispute between Asia's two biggest economies.

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)

Source: http://news.yahoo.com/stock-index-futures-signal-lower-wall-street-open-084152638--finance.html

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