Stocks slip as traders fret ahead of earnings

Stocks fell in quiet trading Monday as traders pulled back ahead of what is widely expected to be a weak earnings season.

The Dow Jones industrial average, which has been trading near a five-year high, slipped 26.50 points or 0.2 percent to close at 13,584.

The reporting season begins Tuesday with Dow component Alcoa. The aluminum maker is expected to post a break-even quarter compared with a profit of 15 cents per share a year earlier. Alcoa shares were unchanged at $9.09. ?

"We've had a good run, and we're toward the top end of range," said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis. "There's very little chance for surprises in the earnings. We're going to see downward comparisons overall."
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Trading was light as the U.S. government and the bond market were closed for the Columbus Day holiday.

The Standard & Poor's 500 shed 4.70 points, or 0.3 percent, and the Nasdaq composite index fell 22.64 points, or 0.7 percent.

Sentiment also suffered after the World Bank reduced its growth forecasts for the East Asia and Pacific region and warned the slowdown in China could worsen and last longer than many analysts expect.?

The World Bank also slashed its economic growth forecasts for Russia, predicting that labor shortages in the country would force up inflation.

For investors, the long-term outlook for Europe is for a drawn-out struggle to resolve debt problems. "This thing has years to play out," said Wren. "We're nowhere near the end of this in any way, shape, or form."?

According to Thomson Reuters data, 91 companies in the S&P 500 have issued negative outlooks vs. 21 positive preannouncements, for a ratio of 4.3 to 1, the weakest showing since the third quarter of 2001.
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Netflix gained 10 percent to $73.26 after Morgan Stanley upgraded the video streaming company, saying it could become a global video platform.

Reuters contributed to this report.

All the major averages are up double digits this year, but investors are expecting a weak earnings season. Sam Stovall, S&P Capital IQ, and CNBC's Bob Pisani, discuss how to position yourself in the fourth quarter.

Source: http://marketday.nbcnews.com/_news/2012/10/08/14299251-stocks-slip-as-trader-fret-ahead-of-earnings-season?lite

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