* Alcoa to lead off with results on Tuesday, its stock flat
* UnitedHealth rises on plans to buy Brazil stake
* Apple falls despite denial of strike at Chinese plant
* Indexes off: Dow 0.25 pct, S&P 0.4 pct, Nasdaq 0.7 pct
By Atossa Araxia Abrahamian
NEW YORK, Oct 8 (Reuters) - U.S. stocks declined in quiet
trading on Monday, pulling back from recent five-year highs as
investors awaited the start of what many expect will be a weak
Analysts forecast earnings will fall 2.4 percent from the
year-ago quarter, which would mark the first decline in three
years and make it difficult to justify keeping stocks near
The reporting season begins on Tuesday with aluminum
company and Dow component Alcoa Inc, which is expected to
post a break-even quarter compared with a 15-cents per share
profit a year earlier. Alcoa shares were unchanged at $9.09.
"We've had a good run, and we're toward the top end of
range," said Scott Wren, senior equity strategist at Wells Fargo
Advisors in St. Louis. "There's very little chance for surprises
in the earnings. We're going to see downward comparisons
Strategists and investors say U.S. stock valuations are
broadly out of sync with earnings estimates.
Trading was light as the U.S. government and the bond
market were closed for the Columbus Day holiday. Volume was less
than 3 billion shares with slightly more than an hour of trading
The Dow Jones industrial average was down 28.92
points, or 0.21 percent, at 13,581.23. The Standard & Poor's 500
Index was down 5.27 points, or 0.36 percent, at 1,455.66.
The Nasdaq Composite Index was down 22.43 points, or
0.72 percent, at 3,113.75.
Sentiment also suffered after the World Bank reduced its
growth forecasts for the East Asia and Pacific region and warned
the slowdown in China could worsen and last longer than many
The World Bank also slashed its economic growth forecasts
for Russia, predicting that labor shortages in the country would
force up inflation.
Europe's debt problems have contributed to weakened global
growth. Euro-zone officials met on Monday to launch the region's
bailout fund. At the meeting finance ministers said that Spain
did not need a bailout because it was taking steps to put its
finances in order.
For investors, the long-term outlook for Europe is for a
drawn-out struggle to resolve debt problems. "This thing has
years to play out," said Wren. "We're nowhere near the end of
this in any way, shape, or form."
Recent earnings warnings from large multinationals such as
FedEx Corp, Caterpillar Inc and Hewlett-Packard
Co, have cited weakness in Europe and China.
"Certainly there has been a lot of downward revisions in
earnings in general. Some people are predicting that we may see
an overall decline in earnings, so there may be some defensive
posturing and profit-taking," Peter Jankovskis, co-chief
investment officer at OakBrook Investments LLC in Lisle,
According to Thomson Reuters data through Monday, 91
companies in the Standard & Poor's 500 have issued
negative outlooks versus 21 positive preannouncements, for a
ratio of 4.3, the weakest showing since the third quarter of
Netflix gained 10 percent to $73.26 after Morgan
Stanley upgraded the video streaming company, saying it could
become a global video platform.
Apple Inc shares shed 2.1 percent to $638.68 and
was the biggest drag on both the S&P 500 and Nasdaq 100
indexes after China Labor Watch, a rights advocate group, said
that a Foxconn plant in China that makes Apple's iPhone was
crippled by a strike. Foxconn, a Taiwanese company, denied the
UnitedHealth Group shares gained 0.6 percent to
$57.69 after the health insurer said it would buy a 90 percent
stake in Amil Participacoes SA, Brazil's largest
healthcare company, for about $4.9 billion.
Chemicals maker TPC Group Inc said it received a
buyout proposal from Innospec Inc for $721.3 million,
topping an offer made by private equity firms. TPC shares jumped
4.9 percent to $45.60 while Innospec shed 2 percent to $33.65.