MarketView for January 6

Summary

Stocks slipped on Monday after a mixed batch of economic reports, which showed a slowdown in growth in the U.S. services sector and a rebound in new orders for factory goods.

Two measures of activity in the services sector indicated slower growth in December, indicating the economic recovery remains modest, while a separate report showed factory orders rose as expected in November.

The S&P 500 closed out 2013 with a gain of 2.4 percent in December, its fourth straight month of gains. But the benchmark index has stumbled in the first three trading sessions out of the gate in 2014, falling more than 1 percent so far in January.

Volume was modest, due in part to icy conditions that snarled travel across the U.S. Midwest. Thousands of flights were canceled or delayed over the weekend, as forecasters warned that life-threatening cold was heading eastward.

About 5.44 billion shares traded on U.S. exchanges, short of the 5.71 billion average so far this month, according to data from BATS Global Markets.

Apparel retailer Men's Wearhouse mounted a hostile bid for rival Jos. A. Bank Clothiers with an increased offer, days after the smaller rival raised its buyout defenses. Men's Wearhouse shares gained 2.2 percent to $51.68, and Jos. A Bank shares climbed 4.5 percent to $56.87.

Twitter shares fell 3.9 percent to $66.29 after being downgraded by Morgan Stanley. The stock had surged nearly 70 percent in the past six weeks. The firm also cut eBay to "neutral weight," sending its shares down 2.8 percent to $51.78.

The S&P telecom sector index .SPLRCL, up 0.5 percent, was the best performing of the 10 major S&P sectors after T-Mobile said it is buying wireless airwave licenses from Verizon Wireless to improve its high-speed network in a $3.3 billion deal, adding that it hopes to follow up with more spectrum purchases. T-Mobile shares shot up 3.7 percent to $33.48 while Verizon rose 0.6 percent to $48.69.

Ford Motor Co (F.N) and its local partners boosted sales in China by nearly 50 percent last year, nudging past Japanese giants Toyota (7203.T) and Honda (7267.T) to make big inroads into the world's largest auto market. Ford shares rose 0.5 percent to $15.58.

Solar panel shares garnered attention. ReneSola (SOL.N) advanced 3.9 percent to $4.23 after the company secured a contract to supply solar panels to a solar project developer based in Japan. SolarCity (SCTY.O) jumped 7.3 percent to $63.61 after Goldman Sachs added the stock to its "conviction buy" list.

Private Sector Down a Bit

Private sector economic activity growth slowed slightly in December, with the services sector reading also edging lower, an industry report showed on Monday.

Financial data firm Markit said its composite Purchasing Managers Index (PMI) - a weighted average of its manufacturing and services indexes - measured 56.1 in December, down just slightly from the 56.2 posted last month, as well as the "flash" or preliminary December reading of the same amount. A reading above 50 signals expansion in economic activity.

Last month's services sector PMI, also reported by Markit on Monday, dipped to 55.7 from 55.9 last month, and was lower than the flash reading of 56.

Despite the slight dip in the main index readings, the pace of growth in hiring advanced for both the services sector and the total private sector. The composite employment gauge rose to 55 from 52.4 last month, while the read on services employment rose to 55.2 from 52.4 in November, which was the lowest since March.

"The U.S. economy appears to have ended 2013 on a strong note, especially in relation to hiring," Chris Williamson, Chief Economist at Markit, said in a press release. The upturn in the rate of job creation "sets the scene for another upbeat non-farm payroll report for December," he said.

Services Sector Slows

The pace of growth in the U.S. services sector slowed for a second straight month in December with business activity expanding at a lower rate and new orders contracting, according to an industry report released on Monday.

The Institute for Supply Management said its services index fell to 53 last month from 53.9 in November. The reading was the lowest for the index since June 2013. Nonetheless, with a reading above 50 indicating expansion, December marked the 48th straight month of growth in the services sector.

The gauge of business activity dipped to 55.2 from 55.5, the weakest reading for the sub-index since September and below expectations for a reading of 56.5.

The read on new orders showed contraction for the first time since July 2009 as it fell below the 50 mark. It dropped to 49.4 in December from 56.4, the lowest reading for new orders since May 2009. On a positive note, the employment gauge rose to 55.8 from 52.5 in November.