Stocks in the Nasdaq finished Monday with modest gains, breaking a string of six straight losing sessions, after a brokerage house upgraded its investment ratings on key semiconductor names including Intel Corp. (INTC). Blue-chips drifted down slightly.
Earlier Monday, Goldman Sachs raised its rating on Intel by adding the shares to its recommended list. It also put chipmakers Analog Devices (ADI) and Maxim Integrated Products (MXIM) on the list.
Trading volume was light as Wall Street waits for signs of an economic recovery. Investors remain reluctant to buy stocks until they see evidence that the economy has hit bottom, Robert Morris, chief investment officer of Lord Abbett & Co., tells Standard & Poor's. "I think there's a little bit of a 'we-won't-shoot-til-we-see-the-whites-of-their-eyes' kind of discretion out there," he says, noting there investors have taken some profits following the Dow index's 1.14% rise on Friday.
The Federal Reserve has trimmed interest rates six times this year and is expected to cut rates again at its policy-setting meeting on Tuesday, August 21, in its continued effort to stimulate the economy.
Other stocks in the news Monday included Cendant Corp. (CD), which said it agreed to buy discount air ticket seller Cheap Tickets Inc. (CTIX) for $425 million in cash. The deal represents the franchising giant's attempt to break into the online travel-agency business.
And soft drink, cereal and snack-food company PepsiCo Inc. (PEP) said it expects cost savings and revenue growth from its acquisition of Quaker Oats Co. to be almost double what it previously estimated but maintained its outlook for earnings growth from the deal.
On Tuesday, investors will look to the latest earnings report from Wal-Mart Stores Inc. (WMT). The No. 1 retailer's results will be viewed as a gauge of how well consumer spending is holding up.
The Dow Jones industrial average slipped 1.17 points, or 0.01%, to 10,415.08. The tech-heavy Nasdaq Composite was up 25.32 points, or 1.29%, to 1,981.79. Meanwhile, the broader S&P 500 index was higher by 1.05 point, or 0.09%, to 1,191.21.
U.S. Treasuries finished mixed. The market was preparing for Tuesday's report on retail sales for July. S&P's economic research unit MMS expects a 0.3% decline in the overall index and a modest 0.1% gain excluding automobile sales. With the Federal Reserve's downbeat Beige Book report still fresh in traders' minds, MMS says the retail sales report will be scrutinized for confirmation that some of the air is escaping from the relatively buoyant consumer sector.
European markets ended higher. In London, the Financial Times-Stock Exchange 100 index finished up 3.90 points, or 0.07%, to 5,431.10, following a report that producer prices fell 0.2% in July, which was better than expected. In France, the CAC 40 ended higher by 74.33 points, or 1.53%, to 4,920.35. In Germany, the DAX Index added 20.28 points, or 0.37%, to 5,453.77, amid a report that German retail sales fell 1.8% in June, the fourth slide in five months, suggesting that consumer spending is too weak to sustain the economy.
In Asia, markets ended lower. Japan's Nikkei 225 plunged 257.50 points, or 2.19%, to 11,477.56, the index' lowest closing level since December 24, 1984. The decline was led by technology and telecommunications shares in the wake of heightened fears of earnings deterioration. In Hong Kong, the Hang Seng index lost 71.52 points, or 0.61%, to 11,694.29.