NEW YORK - US stocks fell Monday as investors returning from year-end holidays cashed in profits from last week's powerful rally and braced for upcoming corporate earnings reports.

The Dow Jones Industrial Average shed 81.80 points (0.91 percent) to close at 8,952.89 and the technology-dominated Nasdaq fell 4.18 points (0.26 percent) to 1,628.03.

The broad-market Standard & Poor's 500 index retreated 4.35 points (0.47 percent) to 927.45.

With little economic news on tap, the market pulled back from Friday's strong rally to open 2009.

"Sentiment may be taking a blow as traders fret over weak corporate profits ahead of fourth-quarter earnings season, which is set to kick off later this month," analysts at Charles Schwab & Co. said.

US stocks on Friday staged a huge rally in the first trading session of 2009 as investors turned the page on a horrific 2008, the worst year on Wall Street since the Great Depression. The blue-chip Dow surged 2.94 percent, ending the holiday-shortened week more than six percent higher than the prior week.

Investors had their eyes Monday on Washington, where president-elect Barack Obama was meeting with congressional leaders to discuss plans to revive the moribund economy, mired in recession for a year and crippled by the global financial crisis.

According to some reports, the package could exceed 850 billion dollars and that appeared to be part of the reason for a generally positive backdrop to open 2009.

Dick Green at Briefing.com cited "scattered longer-term optimism" in the market.

"This is due mainly to the hope that a massive government stimulus plan will stabilize the economy and might even lead to a significant recovery in the second half of the year," he said.

On the slim economic calendar, the Commerce Department reported November construction spending fell to an annual 0.6 percent rate, half the analysts' consensus forecast of a 1.2 percent decline.

The market appeared to shake off news of weak US sales from the major carmakers in December, due to the weak economy, declining consumer confidence and a credit crunch.

General Motors sales fell 31 percent in December, Ford's fell 32 percent and Chrysler's 53 percent.

But shares in GM gained 1.64 percent to 3.71 dollars, while Ford's stock leapt 4.88 percent to 2.58.

Andrea Kramer at Schaeffer's Investment Research said the sales reports "weren't as bad as expected" but that "investors remained concerned regarding the latest surge in energy prices" as well as the upcoming monthly unemployment report.

New York's main contract, light sweet crude for February, shot up 2.47 dollars to close at 48.81 dollars a barrel.

Among other stocks in focus, Apple was up 4.22 percent to 94.58 after chief executive Steve Jobs, whose health has been the subject of rumors, said he was being treated for a "hormone imbalance" but would remain head of the company.

The bond market weakened. The yield on the 10-year Treasury rose to 2.488 percent from 2.416 percent Friday while that on the 30-year bond climbed to 3.040 percent from 2.815 percent.

Bond yields and prices move in opposite directions.

- AFP /ls