U.S. Stocks Wobble After Starting 2018 on a High Note

By Akane Otani and Mike Bird Features Dow Jones Newswires

U.S. stocks wobbled around the flatline Monday after notching a run of records in the first week of trading.

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The Dow Jones Industrial Average fell 31 points, or 0.1%, to 25264. The S&P 500 lost less than 0.1% and the Nasdaq Composite added 0.2%.

Stocks began the year on an upbeat note, buoyed by investors' optimism over the global economy and bets that central banks are unlikely to pressure markets by raising interest rates too quickly.

Many believe the gains will continue in 2018, although some analysts have warned that valuations have made U.S. stocks look pricey relative to their international counterparts.

Kohl's shares jumped 6% after the retailer said its comparable sales jumped over the holidays, boosted by stronger store traffic.

Shares of Crocs, which raised its guidance for fourth-quarter revenue, added 11%.

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Meanwhile, GoPro shares slid 20% after the company said its fourth-quarter revenue would come in below what it had previously expected, in part due to product price cuts.

Analysts say they will be closely watching companies' forecasts for the rest of the year as the earnings season begins in earnest later this month.

"This is when the accounting department really needs to put pen to paper in terms of what tax reform means for them," said Art Hogan, chief market strategist at B. Riley FBR.

Investors have been keeping a close eye on the recently passed U.S. tax overhaul, which Goldman Sachs analysts estimate could give a 5% boost to per-share earnings for the S&P 500 in 2018.

"The critical signpoint for the earnings season will be where companies plan to use their cash, and where their guidance ends up," Mr. Hogan said.

Elsewhere, the Stoxx Europe 600 rose 0.3% on Monday, lifted by gains in shares of basic resources companies.

Solid economic data also helped pull European stocks higher, analysts said.

The European Commission's economic sentiment indicator for the European Union reached 116 in December -- the highest level since August 2000.

In Asia, last week's rally continued across most equity markets.

Hong Kong's Hang Seng Index gained 0.3% and Taiwan's Taiex closed at a fresh 28-year high, up 0.3%. Japanese markets were closed.

In foreign-exchange markets, the U.S. dollar pared some of the previous week's losses, with the WSJ Dollar Index -- which measures the currency against a basket of 16 others -- rising 0.2%.

Write to Akane Otani at akane.otani@wsj.com and Mike Bird at Mike.Bird@wsj.com

(END) Dow Jones Newswires

January 08, 2018 12:40 ET (17:40 GMT)