MarketView for January 7

Summary

The major equity indexes retreated on Monday, over concerns that the upcoming earnings season will indicate that the growth in corporate profits was sluggish at best. At the same time, banks took a hit after they agreed to pay a total of $8.5 billion to end a government inquiry into faulty mortgage foreclosures. The KBW bank index, a gauge of domestic bank stocks, was down 0.3 percent.

Ten mortgage servicers - including Bank of America, Citigroup, JPMorgan and Wells Fargo agreed on Monday to pay $8.5 billion to end a case-by-case review of foreclosures required by U.S. regulators.

In a separate case, Bank of America also announced an $11.6 billion of settlement with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans. BofA also entered into agreements with Nationstar Mortgage Holdings and Walter Investment Management to sell about $306 billion of residential mortgage servicing rights. Bank of America ended the day down 0.2 percent at $12.09 while Nationstar Mortgage Holdings fell 16.8 percent to $38.83. Citigroup ended the day up 0.09 percent to close at $42.47. Wells Fargo closed down 0.5 percent at $34.77.

Other sectors were hit as well, most notably energy and utilities. The S&P 500 energy sector index fell 0.8 percent and the utilities index was off 1.1 percent.

The day's decline came a session after the S&P 500 finished at a five-year high, the result of both a budget deal and a continuation of better than expected economic data. The S&P 500 rose 4.6 percent last week, the best weekly gain in more than a year.

Earnings are expected to be only slightly better than the third-quarter's lackluster results, and analysts' current estimates are down sharply from where they were in October. Fourth-quarter earnings growth is expected to come in at 2.8 percent, according to Thomson Reuters data.

Alcoa kicks off the reporting season by announcing its results after Tuesday's market close. Alcoa shares fell 1.7 percent at $9.10.

Boeing fell 2 percent after a Boeing 787 Dreamliner aircraft with no passengers on board caught fire at Boston's Logan International Airport on Monday morning.

Amazon saw its share price reach its highest price point ever at $269.22 after Morgan Stanley raised its rating on the stock. Amazon ended the day up 3.6 percent to close at $268.46.

Netflix rose 3.4 percent to $99.20 after it said it will carry previous seasons of some popular shows produced by Time Warner's Warner Bros Television.

Disney fell 2.3 percent to $50.97. The company started an internal cost-cutting review several weeks ago that may include layoffs at its studio and other units.