NEW YORK -- Concerns over high stock prices and global politics plagued markets Monday as major stock indexes ended with slight losses in another day of choppy trading. Protests in Hong Kong, a major world financial center, added to the host of political concerns on investors' minds.
The Dow Jones industrial average sank 178 points in the opening minutes, a sudden drop of 1 percent, but then it rebounded.
"You have a ton of risks that have brought back in the market's focus," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass. "There's just a heck of a lot of uncertainty right now."
The Dow fell 41.93 points, or 0.2 percent, to 17,071.22. The Standard & Poor's 500 index fell 5.05 points, or 0.3 percent, to 1,977.80. The Nasdaq composite slipped 6.34 points, or 0.1 percent, to 4,505.85.
DreamWorks Animation, the studio behind Shrek and Madagascar, soared 26 percent after reports that Japan's SoftBank Corp. is in talks to buy the company. DreamWorks gained $5.82 to $28.18.
The market has turned choppy in recent weeks, flipping between solid gains and steep losses. Since hitting a record on Sept. 18, the S&P 500 has slipped 1.7 percent. Coming after a calm summer, the slide has set off a flurry of worried calls to brokerages.
John Canally, chief economic strategist at LPL Financial in Boston, said many investors think the market has gone too long without a major fall.
"I can't tell you how many calls we're getting now asking, 'Is this it? Is this the big one?'" he said.
One reason for the recent turbulence is that the stock market appears "priced for perfection," McMillan said. It's an increasingly common saying among investors, and it means the S&P 500 is so high that corporate profits and the economy have to keep improving to sustain current prices. Good news isn't enough.
"The question is no longer, 'Are we doing well?' It's, 'Are we doing even better?'" McMillan said. "When you pay for perfection, anything shy of that is a disappointment."
At current prices, investors are paying $16.69 for every dollar in company earnings, according to data from FactSet. That's 10 percent above the long-term average.
"There's a certain amount of faith needed at this level," McMillan said.
Traders have pushed the stock market lower despite a string of encouraging economic news. The latest came from the Commerce Department, which reported Monday that consumer spending rose 0.5 percent in August from the previous month. Auto sales made up about half of the increase. It was further evidence that the economy is on solid footing heading into the end of the year.
"The consumer is back in the driver's seat where they should be, moving the economy ahead at what looks like a strong 3 percent pace," said Chris Rupkey, chief financial economist at the Bank of Tokyo in New York, in a note to clients.
Rallies for democracy in Hong Kong escalated Monday, raising concerns that a crackdown by the Chinese government could make the situation worse.
Business on 09/30/2014