MARKET SNAPSHOT: U.S. Stocks Skittish On Mixed Economic Data

By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks fluctuated after reports on U.S. service-sector activity, which was lower than expected, and factory orders, which saw a higher-than-anticipated increase.

The Dow Jones Industrial Average reversed gains and was 30 points lower at 16,439.62. The S&P 500 was down 2.8 points, or 0.2% at 1,828.49. The Nasdaq Composite lost 18 points, or 0.4%, to 4,112.12.

"After the superb gains in 2013, a modest pullback in the S&P 500 is both warranted and understandable," said Terry Sandven, senior equity strategist at U.S. Bank Wealth Management.

"If there is a pullback, it is likely to get to the 50-day moving average level, which is a 2% or 2.5% drop from current levels, before we see buyers move back in," Sandven said.

"However, we think the environment is favorable for equities in 2014, as the economy continues to improve, valuations are not extreme and the inflation, which is the key driver, is benign," he added.

The Institute for Supply Management said Monday its services index for December decelerated to 53% from 53.9% in November. While the number still indicates expansion, it lagged the 55% seen in a MarketWatch-compiled economists poll. In a separate report, orders for goods produced in U.S. factories jumped 1.8% in November, beating the expectations of a 1.6% rise. The increase, led by orders for durable goods, suggests the manufacturing sector enjoyed stronger growth than the services side of the economy toward the end of the last year.

Last week, the ISM manufacturing data showed that the increase in new orders last month was the largest in more than two-and-a-half years, while manufacturing employment accelerated.

The overall improving economy, along with falling unemployment rates and an improving housing market, last month prompted the Federal Reserve to begin tapering its monthly asset-buying program by $10 billion to $75 billion last month.

Later on Monday, the U.S. Senate set to vote on the nomination of Janet Yellen, currently the Fed's vice chair, to lead the central bank.

Boeing Co. (BA) pared earlier gains and was 0.7% higher. Late Friday, Boeing's largest union voted to accept a new contract that will keep manufacturing for the planned 777X and its wings in Washington state. Analysts at Bernstein Research reiterated the stock's outperform rating and raised the target price to $165 from $156, noting that under the terms of the new agreement there will be no strikes for the next ten years.

Shares in SolarCity Corp. (SCTY) soared 12.4% after analysts at Goldman Sachs upgraded the stock to buy. Analysts at Goldman Sachs also downgraded First Solar, Inc. (FSLR) from buy to sell, sending shares down 9.4%. The sliding of the stock triggered the restrictions for short sales for the stock at 10:48 AM, according to an alert sent out by Nasdaq OMX.

Twitter Inc. (TWTR) shares dropped 4.8% after Morgan Stanley cut shares of the social media company to underweight from equal-weight, with a price target of $33. "As competition for online ad dollars intensifies, we guide investors to Google and Facebook, dominant platforms with more attractive risk/reward," Analyst Scott Devitt wrote.

Sirius XM Holdings Inc. (SIRI) shares soared late on Friday and continue to rise on Monday, trading up 6.6% after Liberty Media offered to buy the satellite radio company in a stock swap that would value the company at $3.68 a share. Liberty already holds a 52% stake in Sirius.

Shares in Apple Inc. (AAPL) recovered earlier losses and was flat, after losing 2.2% on Friday in the wake of a rating downgrade. The moves in the heaviest-weighted component of the Nasdaq Composite affect the index.

The battle among the men's clothing retailers continued Monday, as Men's Wearhouse Inc. (MW) said it began a cash tender offer worth roughly $1.6 billion, in which it would buy Jos. A. Bank Clothiers Inc. (JOSB) shares from current holders at $57.50 a piece. The two clothiers have been exchanging buyout offers for months.

Jos. A. Bank shares were up 4.4% while Men's Wearhouse was up 4.3%.

Asian stocks ended lower after a rising yen hit Japanese equities and concerns over new listings weighed on Chinese stocks. Europe stocks were mixed.