NEW YORK (Reuters) - The S&P 500 posted its first monthly decline since November on Monday, as stocks slipped on signs the U.S. economy may be slowing and as a recession in Spain highlighted risks in the euro zone.
Despite Monday's decline, the picture was not overwhelmingly negative. The S&P closed out April with a decline of 0.8 percent, after four straight days of gains last week helped the index pare much steeper losses for the month.
Still, a recent string of economic data suggests the economy may slow in the summer months and has caused the market to stall just shy of the four-year highs reached earlier in the month. A much sharper-than-expected decline in Midwestern business activity in April reported on Monday by an industry group was the latest evidence of a slowdown.
"We had such a strong first quarter, and we've lost that momentum in the last two weeks," said Jake Dollarhide, chief executive at Longbow Asset Management in Tulsa, Oklahoma. The data "reinforces the ominous tone on Wall Street, along with the fears we have about Europe."
Composite trading volume was among the lightest of the year at 6.1 billion on Monday compared with a daily average of this year of around 6.8 billion. The CBOE volatility index .VIX, or VIX, climbed 5.1 percent, after earlier hitting its highest level in more than a week.
Spain on Monday reported its economy contracted in the first quarter, dragging the country into recession as deep government spending cuts to reduce a massive deficit and troubles in the banking sector likely delayed any return to growth. Though expected, the news highlighted the serious headwinds the world economy faces.
Banks were among the top decliners on Wall Street after Standard & Poor's cut the credit ratings of 11 Spanish banks on Monday, following its downgrade of Spain last week.
The S&P 500 financial sector index .GSPF fell 0.6 percent while Bank of America Corp (BAC.N) dropped 1.7 percent to $8.11. Shares of Spanish bank Santander STD.N traded in New York fell 2.2 percent to $6.33 and are down 16 percent this year.
The Dow Jones industrial average .DJI dropped 14.68 points, or 0.11 percent, to 13,213.63. The Standard & Poor's 500 Index .SPX fell 5.45 points, or 0.39 percent, to 1,397.91. The Nasdaq Composite Index .IXIC lost 22.84 points, or 0.74 percent, to 3,046.36.
The S&P 500's 0.8 percent decline for April was a comeback from earlier in the month when worries over Europe and the U.S. economy sent it down more than 4 percent for the month.
Many investors are still worried about the potential for a pullback heading into the seasonally weak period for stocks that starts in May, especially if it is accompanied by a slowing economy and more problems in Europe.
"In equities, we stepped back to neutral several weeks ago," said Goldman Sachs in a research note. "Our general view is that the U.S. seems to be slowing - though how much and for how long is an open question - while equity market domestic growth views remain elevated."
Defensive sectors were the best performers in April. The telecom sector .GSPL rose 3.6 percent for the month, while financials .GSPF fell 1.9 percent.
Shares of Monster Beverage Corp (MNST.O) jumped as much as 28 percent on Monday after The Wall Street Journal reported Coca-Cola Co (KO.N) is in talks to buy the energy drink maker, but the shares closed 0.8 percent lower after a denial from Coca-Cola.
In earnings news, Humana Inc (HUM.N) declined 8.1 percent to $80.68 after the company, one of the largest providers of Medicare insurance for the elderly, posted a 21 percent drop in profit. The Morgan Stanley healthcare payor index .HMO declined 1.9 percent.
Exchange operator NYSE Euronext NYX.N reported its quarterly profit fell by almost one-third due to a difficult trading environment and costs from its failed merger with Deutsche Boerse (DB1Gn.DE). Its shares fell 4.9 percent to $25.75.
According to Thomson Reuters data through Monday morning, of the 297 S&P 500 companies that have reported quarterly results so far, 72 percent topped estimates. A strong earnings season helped lift the benchmark S&P index to its best week since mid-March last week.
Shares in Apple (AAPL.O) gave back some of their post-earnings pop, falling 3.2 percent to $583.98. Last week the shares jumped 9 percent after the company blew away Wall Street earnings estimates.
On the positive side of Monday's earnings, shares of Sunoco Inc (SUN.N) jumped 20.5 percent to $49.29 after pipeline operator Energy Transfer Partners LP (ETP.N) said it would buy the company for $5.35 billion in stock and cash.
Barnes & Noble Inc (BKS.N) surged 52 percent to $20.75 after Microsoft Corp (MSFT.O) agreed to invest $300 million in the bookseller's digital and college operations. The deal values the Nook and textbook businesses at $1.7 billion.
Editing by Leslie Adler