Stocks finished with mild losses Monday as investors digested the latest positive economic data and a trickle of corporate news.
The Dow Jones industrial average was trading down 22.74 points, or 0.24%, at 9,448.81. The broader Standard & Poor's 500 index lost 3.83 points, or 0.38%, to 1,014.81. The tech-heavy Nasdaq Composite index was down 9.33 points, or 0.50%, at 1,845.70. Trading was slow.
On Tuesday, Federal Reserve policymakers will meet on interest rates. Most observers expect the Fed to maintain a neutral policy stance. "The Fed is unamimously expected to keep rates on hold and upcoming data will have little relevance for this Fed meeting or for the remaining meetings this year," says economic research group MMS International.
Also on Tuesday, investors will get the latest read on the consumer price index, a gauge of inflation at the retail level. The CPI should show a rise of 0.4% in August, while the core, excluding autos, is expected to increases a more tepid 0.2%. "Overall, similar to the PPI, most of the upside risk comes from energy -- and specifically, gasoline," says MMS.
Companies expected to report earnings Tuesday include General Mills (GIS), Pier 1 Imports (PIR), and homebuilders KB Home (KBH) and Lennar (LEN).
On Monday, medical device company Boston Scientific (BSX) raised its third-quarter sales and earnings per share guidance. The company unveiled positive results from its U.S. trial for its new drug-coated stent to prop open clogged arteries. After a delayed opening, the shares gained 7.5%.
Analyst upgrades lifted some shares. IBM (IBM) was upgraded to buy, from neutral, by UBS Financial. The stock was about 1% higher.
Meanwhile, Applied Materials (AMAT) was upgraded to buy from neutral by Merrill Lynch, and was mostly unchanged.
On the other hand, SoundView cut its rating on Motorola (MOT) to neutral from outperform. Motorola shares shed about 1% despite the ratings upgrade.
Treasuries finished modestly higher in price, up from session lows, says MMS, amid short-covering. Still, traders are showing no real commitment to positions ahead of tomorrow's FOMC meeting, says MMS. "Few felt compelled to stick their necks out, opting to square up after having been burned the past couple Fed meetings."
Monday's slate of releases kicked off with U.S. business inventories, which fell 0.1% in July, after a flat reading in June. Sales increased 1.6%, following a 1.3% jump. "The data shouldn't impact Treasuries too much, but they will add to expectations that production is poised to surge in the fourth, and first quarters," says MMS.
The Empire State Manufacturing Survey showed that conditions improved for New York manufacturers in September, with its general business conditions index rising to 18.4, from 9.98 in August. "Indexes for new orders and shipments also signaled continuing improvement, while the unfilled orders and inventories indexes were slightly negative," according to the report. However, expectations fell back slightly to 58.8, from 59.5, while prices paid rose to 15.6, from 4.08. "Overall the regional data was fairly healthy, though employment clearly continues to lag," says MMS.
August industrial production rose 0.1% in August, after a revised 0.7% gain in July. Capacity utilization held steady at 74.6%. Production of motor vehicles fell 2.6% after a 3.4% gain the prior month, reports MMS. However, utility output jumped 1.9%, with a 2.0% increase in electrical and a 1.0% rise in gas. The data were in-line with subdued expectations, says MMS.
The U.S. current account deficit was unchanged in the second quarter at $138.7 billion. The goods and services deficit increased to $123.4 billion, up from $121.6 billion.
European stock markets backed off most of their earlier gains, but finished higher Monday. London's Financial Times-Stock Exchange 100 index gained 23.10 points, or 0.55%, to close at 4,260.90. In Paris, the CAC 40 moved 15.8 points higher, or 0.48%, to finish at 3,338.36. Germany's DAX index had gained 13.15 points, or 0.37%, trading at 3,521.21.
Tokyo stock markets were closed on Monday for Respect for the Aged Day. In Hong Kong, the Hang Seng index gained 1% on Monday, or 109.21 points, to finish at 10,992.73.