DJI- NEW YORK, Oct 8 (Reuters) - U.S. stocks slipped in light trading on Monday, pulling back from recent five-year highs ahead of an earnings season expected to be weak.
Trading volume was the lowest so far this year in a full session as the U.S. government and the bond market were closed for the Columbus Day holiday. About 4.1 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, compared with the year-to-date daily average of 6.54 billion to last Friday.
Stocks were pressured throughout the day as the World Bank cut its growth forecasts for the East Asia and Pacific region, and warned that the slowdown in China could worsen and last longer than many analysts expect.
Analysts expect third-quarter earnings to fall for the first time in three years even though the S&P 500 gained 5.8 percent during that period. Such a grim forecast might call into question whether the rally can be sustained.
"Certainly there have been a lot of downward revisions in earnings in general," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC in Lisle, Illinois. "Some people are predicting that we may see an overall decline in earnings, so there may be some defensive posturing and profit-taking."
The reporting season begins in earnest on Tuesday with Dow component Alcoa Inc AA.N, which is expected to post a break-even quarter compared with a profit of 15 cents per share a year earlier. Alcoa shares rose 0.3 percent to $9.12.
The Dow Jones industrial average .DJI fell 26.50 points, or 0.19 percent, to 13,583.65 at the close. The S&P 500 .SPX lost 5.05 points, or 0.35 percent, to 1,455.88. The Nasdaq Composite .IXIC dropped 23.83 points, or 0.76 percent, to end at 3,112.35.
Analysts forecast third-quarter earnings of S&P 500 companies will fall 2.3 percent from the year-ago quarter, according to the latest Reuters data. Earnings for the fourth quarter, which will be reported early next year, are seen up 9.6 percent.
However, some questioned whether the earnings bar was being set too low.
John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York, said companies will find it hard to disappoint, and "surprises will have a more positive than negative look."
Further weighing on sentiment, euro-zone finance ministers said Spain did not need a bailout because it was taking steps to put its finances in order. Expectations that Madrid would ask for financial aid have helped support equities and other risky assets over the past several weeks.
Recent earnings warnings from large multinationals such as FedEx FDX.N, Caterpillar CAT.N and Hewlett-Packard HPQ.N have cited weakness in Europe and China.
According to Thomson Reuters data through Monday, 91 companies in the S&P 500 have issued negative outlooks versus 21 positive pre-announcements, for a ratio of 4.3, the weakest showing since the third quarter of 2001.
Netflix NFLX.O gained 10.5 percent to $73.52 after Morgan Stanley raised its rating to "overweight" on the stock of the video streaming company, saying that Netflix could become a global video platform.
Apple Inc AAPL.O shares fell 2.2 percent to $638.17, ranking as the biggest drag on both the S&P 500 and the Nasdaq 100 .NDX despite denials of a strike at one of its manufacturing plants. China Labor Watch said a Foxconn plant in China that makes Apple's iPhone was crippled by a strike, but Foxconn, a Taiwanese company, denied the report.
NYMEX- NEW YORK, Oct 8 (Reuters) - U.S. crude futures fell on Monday on concerns that slower economic growth in China and the debt crisis in Europe will curb demand for petroleum, while the potential for Middle East turmoil to disrupt supplies limited losses.
CBOT SOYBEAN- CBOT soybean futures on the Chicago Board of Trade ended lower on Monday on worries about the economy in the world's top soy buyer China, on a firmer dollar and on positioning ahead of monthly U.S. government crop estimates, traders said.
• The World Bank cut its economic growth forecasts for the East Asia and Pacific region and said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast.
• Seasonal pressure noted from the expanding U.S. soybean harvest. USDA's weekly crop progress report will be released Tuesday, a day later than normal, due to the federal Columbus Day holiday. Traders estimated that the U.S. soy harvest was roughly two-thirds complete.
• Deferred CBOT soybean contracts pressured by ideas of a record-large South American soy harvest. Rains should spread and intensify in Brazil's soy belt later this week, improving soil moisture, local forecaster Somar said.
• Market underpinned by short-covering. Chart support in November soybeans SX2 held at the 100-day moving average near $15.36-1/4 per bushel.
• Ahead of USDA's October supply/demand reports on Thursday, the average estimate for U.S. 2012 soybean production among 26 analysts surveyed by Reuters ahead was 2.759 billion bushels, up from USDA's September forecast of 2.634 billion.
• The average analyst estimate for U.S. 2012/13 soybean ending stocks was 134 million bushels, up from USDA's September forecast of 115 million.
• Paraguay's central bank raised its outlook for 2013 economic growth to 9.5 percent from between 8.0 percent and 8.5 percent previously, citing an expected jump in soy and grains output.
FCPO- SINGAPORE, Oct 8 (Reuters) - Malaysian palm oil futures closed down 2 percent on Monday as traders braced for rising inventory levels, offseting bargain-hunting seen earlier in the market after steep declines last week to a near three-year low.
A monthly report by the Malaysian Palm Oil Board (MPOB) on Wednesday could show September stock levels hitting a record high, setting a bearish tone for fundamentals.
"The market has no specific direction to go yet after falling so much," said a Singapore-based trader with a global commodities house, referring to prices that fell to near 3-year low and posted their third straight weekly loss last week.
"We have the MPOB report for September's end-stock. The market has been expecting the worst so if it is a bit better than market expectations, that will help for a good rebound," the trader added.
The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 2 percent to close at 2,368 ringgit ($785) per tonne, after trading in a range from 2,361 to 2,446 ringgit.
Total traded volumes stood at 36,000 lots of 25 tonnes each, much higher than the usual 25,000 lots.
Technical analysis showed palm oil is expected to end its rebound at or below 2,503 ringgit per tonne, and fall towards 2,230 thereafter, Reuters market analyst Wang Tao said.
Palm oil investors are looking out for Malaysia export data for Oct. 1-10, also due on Wednesday, after weaker-than-expected numbers in September failed to alleviate concerns over high stock levels. PALM/ITS PALM/SGS
The market received a temporary boost last week from a possible Malaysian move to slash crude palm oil export taxes to 8-10 percent from 23 percent, but an official said on Friday the decision had been delayed.
China's soybean oil futures fell to a 4-month low on Monday, after trade resumed following a week-long holiday and in line with steep losses on the Malaysian palm oil market last week.
The most active January 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 2 percent lower at 9,088 yuan per tonne, after going as low as 9,050 yuan, a level last seen on June 5.
In a bearish sign for palm oil, Brent crude oil fell below $111 per barrel on Monday on concerns that slower economic growth would curb oil demand, but supply worries stemming from tension in the Middle East helped check losses. O/R
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 edged down 0.4 percent in late Asian trade.
REGIONAL EQUITY- BANGKOK, Oct 8 (Reuters) - Southeast Asian stocks mostly retreated on Monday amid concerns over the global economic outlook, with Indonesia coming off an intraday record on selling in recent gainers such as Astra International ASII.JK while property shares led Singapore lower.
Jakarta's Composite Index .JKSE fell 1 percent, erasing early gains that pushed the main index to an intraday record high of 4,324.79.
Indonesia's biggest listed company by market capitalisation Astra International lost 2.4 percent after a 5.8 percent surge on Friday when the main index closed at a high of 4,311.31.
In Singapore, CapitaLand Ltd CATL.SI dropped 3.3 percent while other property shares also fell after new government measures were introduced to cool the city-state's property market.
The benchmark Straits Times Index .FTSTI finished down 1 percent. It was up 1.55 percent last week and was Southeast Asia's second-best performing market after the Philippines .PSI.
Malaysia's index .KLSE ended unchanged, with foreign investors buying shares worth a net 117 million ringgit ($38.30 million) while retail and local institutions were net sellers, stock exchange data showed.
