Stocks Retreat; Caterpillar, Red Hat Fall After Hours

By VICTOR REKLAITIS, INVESTOR’S BUSINESS DAILY

Stocks lost ground Monday, but finished off their session lows.

The Nasdaq dropped 0.6%, after being down as much as 0.9%. The S&P 500 and the Dow Jones industrial average each pulled back 0.2%. Volume decreased from Friday’s levels, which had been boosted by quadruple witching.

After the market’s close, Red Hat (RHT) fell as it reported adjusted fiscal second-quarter profit of 28 cents a share, a penny below forecasts. The software maker has a respectable IBD Composite Rating of 84 out of a best-possible 99. It’s been consolidating since late April and finding support near its 10-week moving average in recent weeks.

Also after the bell, Caterpillar (CAT) dropped after cutting its 2015 guidance. The heavy-equipment giant has a mediocre Composite Rating of 58. It’s been consolidating since February and has been trading under its 200-day moving average.

During the regular session, fresh bickering between EU heavyweights Germany and France over the pace of banking union in the eurozone hurt stocks. There was also other bad news from Europe: a German business sentiment index fell to 101.4 in September from 102.3 in August. That was worse than expected, and the index’s fifth-straight monthly decline.

Among leading stocks, Apple (AAPL) fell 1% in big turnover as the first three days of iPhone 5 sales broke records but disappointed analysts. Apple shares remain well extended from a handle buy point at 619.97 and just 2% below an all-time high reached Friday.

On Tuesday, Copart (CPRT) and Factset (FDS) are among the companies expected to report quarterly results. The session’s economic reports will include fresh readings on home prices and consumer confidence.

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