Stocks took a pause Monday from their big September rally as worries about the financial sector offset excitement over a fresh round of corporate dealmaking.
The Dow Jones industrial average lost 48 points in a late-day slide, but it's still up 8 percent for the month, putting it on track for its best September since 1939.
Chip Bryan, CEO of SmarTrend, an electronic trend trading system, said Monday's modest decline was largely tied to investors pocketing profits racked up during the market's four-week rally.
Prior to Monday the Dow Jones industrial average had risen in each of the past four weeks, its longest winning streak since eight consecutive weekly gains ended in late April when stocks hit their highest levels of the year.
"The September rally has been surprisingly resilient," Bryan said. But investors might be ready to put the brakes on the run-up so they can wait to see what happens during earnings season, which kicks off next week, Bryan said.
Financial stocks mostly dipped as concern remains about the health of Europe's banking sector. Moody's Investors Service cut its rating on Anglo Irish Bank Corp., one of Europe's more troubled banks in recent months. Global banking giants like Barclays PLC and JPMorgan Chase & Co. each fell more than 1 percent.
With no major economic reports to drive trading, investors focused on individual stocks after major deals in the airline, consumer products and retailing industries.
The Dow Jones industrial average fell 48.22, or 0.4 percent, to close at 10,812.04.
The Standard & Poor's 500 index dropped 6.51, or 0.6 percent, to 1,142.16, while the Nasdaq composite index fell 11.45, or 0.5 percent, to 2,369.77.
In deal news, consumer products giant Unilever NV agreed to buy beauty products maker Alberto Culver Co. for $3.7 billion. Southwest Airlines Co. will purchase AirTran Holdings Inc. for about $1.4 billion. Wal-Mart Stores Inc. proposed to buy South African consumer goods distributor Massmart Holdings Ltd. for about $4.25 billion.
Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth Fund, said the latest deals are a sign companies are confident economic growth will pick up in the coming quarters. Acquisition activity has been booming this month as companies become more willing to invest some of their large cash reserves built up during the recession.
"The timing is never certain, but smart companies are saying, 'If not now, when?'" Sansoterra said. "This is the time to be doing it."
Shares of Unilever, which makes Dove soaps, Axe deodorants and Suave shampoos, rose 34 cents to $29.71. Alberto Culver, which makes beauty products such as TRESemme, VO5 and Simple, jumped $6.16, or 19.6 percent, to $37.64.
AirTran shares jumped $2.79, or 61.3 percent, to $7.34. The deal valued Airtran shares at $7.69. Southwest rose $1.07, or 8.7 percent, to $13.35.
Wal-Mart shares fell 60 cents to $53.48.
JPMorgan shares fell 67 cents to $39.08. Barclays dropped 22 cents to $19.59.
Traders who prefer to look at the broader economic picture will get plenty of data later in the week to review. Traders get reports on consumer sentiment, weekly jobless claims and a final reading on second-quarter gross domestic product before the month ends Thursday.
On Friday, traders receive a key report on the manufacturing sector. The same monthly report helped jump-start the September rally when it was released at the beginning of the month.
Bond prices rose Monday, indicating some investors continued to seek safer alternatives to stocks. Even with stocks rising sharply throughout the month, money has regularly flowed into bonds and other perceived safe investments like gold.
The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.51 percent from 2.61 percent late Friday.
Falling stocks outpaced rising ones four to three on the New York Stock Exchange, where volume came to 920 million shares.
