* Factory orders fall shy of estimate
* Oracle to buy Acme Packet for $1.9 billion
* Indexes off: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.5 pct
By Chuck Mikolajczak
NEW YORK, Feb 4 (Reuters) - U.S. stocks fell on Monday after
a disappointing report on factory orders, retreating from gains
in the prior session that left the S&P 500 at a five-year high
and the Dow above 14,000.
Chevron and Wal-Mart were among the biggest drags on the Dow
after analyst downgrades.
The gains on Friday left the benchmark S&P 500 roughly 60
points away from its all-time intraday high of 1,576.09 while
the Dow's march above 14,000 was the highest for the index since
The benchmark S&P index is up 5.5 percent for the
year, with nearly half of the gains coming in the session after
U.S. legislators successfully sidestepped temporarily the
"fiscal cliff" of automatic tax increases and spending cuts,
which threatened to derail the economic recovery.
"We should get a pullback. Markets have been on a tear and
they have been on a tear for good, sound economic and
earnings-driven reasons," said Peter Kenny, managing director at
Knight Capital in Jersey City, New Jersey.
Data from the Commerce Department showed overall factory
orders rose 1.8 percent during the month, below the median
forecast of 2.2 percent by analysts polled by Reuters, in a
possible sign companies may be losing faith in the economy's
recovery over concerns about deficit reduction measures that
could slow the economy.
Economic data has pointed to a modest U.S. recovery, but the
data has not been strong enough to upset investor expectations
the Federal Reserve will continue its stimulus policy that has
"We are right on that razor's edge, so to speak, where there
is not enough robust profile in the economic data to suggest the
Fed needs to change policy, but at the same time people are
aware that there is a shelf life on this policy and as we
continue to sit on that fence, the markets move higher," said
Shares of household products company Clorox rose 1.3
percent to $80.17 after the company's quarterly profit beat
analysts' estimates as a severe flu season boosted sales of
Earnings are due from Anadarko Petroleum Corp and
Yum! Brands Inc, owner of fast-food chains, after the
The Dow Jones industrial average dropped 100.00
points, or 0.71 percent, to 13,909.79. The Standard & Poor's 500
Index lost 9.35 points, or 0.62 percent, to 1,503.82. The
Nasdaq Composite Index declined 15.13 points, or 0.48
percent, to 3,163.97.
According to Thomson Reuters data, of the 256 companies in
the S&P 500 that have reported earnings through Monday morning,
68.4 percent have reported earnings above analyst expectations
compared with the 62 percent average since 1994 and the 65
percent average over the past four quarters.
S&P 500 fourth-quarter earnings are expected to rise 4.4
percent, according to the data. That estimate is above the 1.9
percent forecast at the start of earnings season, but well below
the 9.9 percent fourth-quarter earnings forecast on Oct. 1.
Chevron Corp dipped 1.1 percent to $115.18 after UBS
cut its rating on the Dow component to neutral." while Wal-Mart
Stores Inc shed 1.6 percent to $69.37 after JP Morgan
lowered its rating on the world's largest retailer to "neutral"
and reduced its price target to $75 from $84 per share.
Oracle Corp lost 1.1 percent to $35.81 after the
company agreed to buy network gear maker Acme Packet Inc
for about $1.9 billion. Acme Packet shares surged 22.5
percent to $29.30.
Herbalife Ltd slumped 6.5 percent to $32.80 after
The New York Post reported the seller of weight loss products is
facing a probe by the Federal Trade Commission. Herbalife has
been in the spotlight since December when activist hedge fund
manager William Ackman revealed he held a short position. The
stock was on track for its sixth straight decline.