* Factory orders hint of U.S. economy weakness
* CBOE Volatility index up more than 10 pct as investors
* Oracle falls after agreeing to buy Acme Packet for $1.9
* Spanish and Italian political uncertainty spark concerns
* Indexes off: Dow 0.8 pct; S&P 0.9 pct; Nasdaq 1.2 pct
By Angela Moon
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.
Investors also grew wary on political uncertainty in the
euro zone, leading to a sharp rise in Spanish government bond
Chevron and Wal-Mart were among the biggest drags on the Dow
after analyst downgrades.
"S&P technicals are at overbought levels, and risk-off
harbingers, such as Spanish 10-year yields, which are much more
difficult for central bankers to tame, have bounced off recent
lows," said Peter Cecchini, managing director at New York-based
Cantor Fitzgerald & Co.
Spanish and Italian bond yields rose, renewing worries about
the euro zone's sovereign debt crisis. Spain's prime minister
faced calls to resign over a corruption scandal, while a probe
of alleged misconduct involving an Italian bank was expected to
widen three weeks before a national election.
The benchmark S&P 500 rose on Friday, leaving it 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 S&P index is up 5.5 percent for the year, with
nearly half of the gains coming after U.S. legislators
temporarily sidestepped the "fiscal cliff" of automatic tax
increases and spending cuts.
Data from the Commerce Department showed overall factory
orders rose 1.8 percent in December, below economists'
expectations. The report said capital goods orders outside of
the defense and aircraft industries, edged 0.3 percent lower.
The category is seen as a gauge of U.S. business investment
Economic data has pointed to a modest U.S. recovery, but the
data have not been strong enough to upset investor expectations
the Federal Reserve will continue its stimulus policy that has
The Dow Jones industrial average was down 117.19
points, or 0.84 percent, at 13,892.60. The Standard & Poor's 500
Index was down 13.72 points, or 0.91 percent, at
1,499.45. The Nasdaq Composite Index was down 37.77
points, or 1.19 percent, at 3,141.33.
The CBOE Volatility index VIX, Wall Street's
so-called fear gauge, jumped more than 10 percent to 14.48 by
Chevron Corp dipped 1 percent to $115.34 after UBS
cut its rating to neutral, while Wal-Mart Stores Inc
shed 1.5 percent to $69.46 after JP Morgan lowered its rating on
the world's largest retailer and reduced its price target.
Oracle Corp lost 2.6 percent to $35.28 after the
company agreed to buy network gear maker Acme Packet Inc
for about $1.9 billion. Acme Packet shares surged 22
percent to $29.20.
Shares of household products company Clorox rose 1.3
percent to $80.23 after quarterly profit beat analysts'
estimates as a severe flu season boosted sales of disinfecting
Earnings are due from Anadarko Petroleum Corp and
Yum! Brands Inc, owner of fast-food chains, after the
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.
Herbalife Ltd slumped 3 percent to $34.03 after the
New York Post newspaper reported the seller of weight loss
products is facing a probe by the Federal Trade Commission.