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* Bank of America shares up on $11 billion Fannie Mae
* Amazon stock hits all-time high on Morgan Stanley view
* Indexes off: Dow 0.47 pct, S&P 0.45 pct, Nasdaq 0.41 pct
By Rodrigo Campos
NEW YORK, Jan 7 (Reuters) - U.S. stocks fell on Monday as
traders cashed in recent gains that lifted the S&P 500 to a
five-year high on Friday and awaited Tuesday's start of the
fourth-quarter earnings season.
Last week was the best for U.S. stocks in more than a year
as a budget deal and economic data boosted investor confidence.
Investors will likely turn their attention to the
fourth-quarter earnings season that kicks off this week.
Earnings are expected to be only slightly better than the
third-quarter's lackluster results and analysts' current
estimates are down sharply from what they were in October.
"We have a cautious market entering fourth-quarter earnings
season," said Peter Cardillo, chief market economist at Rockwell
Global Capital in New York. "I think it's going to be a
disappointing one this time around."
Financial shares will be in focus a day after global
regulators known as the Basel Committee gave banks four more
years and greater flexibility to build up cash buffers, scaling
back moves that aimed to help prevent another financial crisis.
"Basel giving banks four more years to get their act
together will be good" for stocks, Cardillo said.
Bank of America shares rose 0.5 percent to $12.17
after hitting their highest since May 2011 as it reached a
settlement with Fannie Mae worth roughly $11.6 billion to
resolve agency mortgage repurchase claims.
The bank also entered into agreements with Nationstar
Mortgage Holdings and Walter Investment Management
to sell about $306 billion of residential mortgage
Nationstar rose 16.8 percent to $38.80 and Walter Investment
added 7 percent to $47.13.
The Dow Jones industrial average fell 63.59 points,
or 0.47 percent, to 13,371.62. The S&P 500 dropped 6.53
points, or 0.45 percent, to 1,459.94. The Nasdaq Composite
lost 12.56 points, or 0.41 percent, to 3,089.09.
Walt Disney Co started an internal cost cutting
review several weeks ago that may include layoffs at its studio
and other units, three people with knowledge of the effort told
Reuters. Disney shares fell 1.4 percent to $51.46.
Video-streaming service Netflix Inc shares gained 4
percent to $99.78 after it said it will carry previous seasons
of some popular shows produced by Time Warner's Warner
Amazon.com shares hit their highest price ever at
$269.22 after Morgan Stanley raised is rating on the stock.
Shares were up 3.6 percent at $268.50.
Roche's chairman was quoted as saying the Swiss
pharmaceutical group is no longer considering a bid for the U.S.
gene-sequencing company Illumina. Illumina shares were
off 8 percent at $50.20.
Major U.S. technology companies could miss estimates for
fourth-quarter earnings as budget worries likely led some
corporate clients to tighten their belts last month.