US stocks fell as investors focus on ISM non-manufacturing composite

U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to fresh highs last week, as investors awaited a report that may show American service industries grew at a faster pace in July.

The S&P 500 declined 0.2% to 1,705.57 at 9:32 a.m. in New York. The equity benchmark gained 1.1% last week as companies from LinkedIn Corp. to Goodyear Tire & Rubber Co. posted financial results exceeding analysts’ predictions.

“When the market has moved up so far so quickly, there’s always a concern over valuation,” Andrew Popper, a London-based global strategist at Beauclerc Advisory Services Ltd., told Mark Barton on Bloomberg Television. “But if you look at the earnings projections in the U.S., they are consistent with the level of economic growth, and this is where the difference lies compared with Europe. We’re beginning to shift to high-quality cyclicals that have a good free cash-flow yield.” he concluded.

Investors are most likely still influenced by Fridays weaker-than-expected jobs data, which closed a week full of economic data. Friday, the Dow industrials and S&P 500 both rose to record closing highs after the Labor Department reported that 162,000 jobs were created in July, lower than the 183,000 expected.

While Mondays economic calendar is relatively light, at 10 a.m. EDT, the Institute for Supply Management reported that its non-manufacturing index rose to 56 in July from 52.2 the previous month beating estimates of 53.1.

Federal Reserve Bank of Dallas President Richard Fisher will give a speech on the U.S. economy to the National Association of State Retirement Administrators’ conference in Portland, Oregon, at 11:45 a.m. New York time.

Stocks advanced last week, sending the S&P 500 above 1,700 for the first time, as central banks vowed to maintain stimulus and data showed economic growth beat projections in the second quarter. The Fed said persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month.

Central bank policy makers have been debating the pace and timing of any cuts in the monetary stimulus that has helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. Tapering of the pace of asset purchases may be postponed due to weak non-farm payroll data report issued on Friday. Numbers missed estimates by as much as 20 000. Earlier this year the Fed has put an emphasis on the importance of unemployment rate related to reducing stimulus.

European markets also slumped as Euro-area services output shrank at a slower pace than initially estimated in July, adding to evidence the economy is gathering strength to pull out of a record-long recession.

HSBC fell 5.1% to 715.9 pence, the largest drop since November 2011. First-half net income rose 10% to $10.28 billion after U.S. loan impairments fell, the London-based lender said.