Stocks finished modestly higher in slow trading Tuesday, as investors considered M&A activity and a drop in oil futures. Caution flags from technical analysts and worries about historical September weakness helped restrain the market, says Standard & Poor's Equity Research.
The Dow Jones industrial average edged up 5.13 points, or 0.04%, to 11,469.28. The broader Standard & Poor's 500 rose 2.24 points, or 0.17%, to 1,313.25. The tech-heavy Nasdaq composite added 12.54 points, or 0.57%, to 2,205.7, helped by Apple (AAPL).
NYSE breadth was slightly positive, with 19 issues advancing for every 14 declining. Nasdaq breadth was 18-12 positive.
Recent gains have left the markets at a turning point, some analysts say. "U.S. equity markets and 10-year Treasuries have reached critical inflection points that should result in reversals of trend within the next 10 trading day," says Morgan Stanley technical analyst Mark Newton. "August's stock market rise occurred on seasonally weak volume, and breadth has remained lackluster."
Others say stocks could extend their advance. "We believe the stock market has a little further to run before the major indexes run into some key areas of resistance," says Mark Arbeter, chief technical analyst at S&P.
A possible boost to oil supplies was in focus Tuesday. Oil giant Chevron (CVX) was higher after the company, with partners Statoil (STO) and Devon Energy (DVN), said tests may indicate a major oil discovery in the Gulf of Mexico.
In the energy markets, October West Texas Intermediate crude oil futures closed down 59 cents at $68.60 a barrel, a five-month low, following the Gulf find.
Deal news continued to buzz. Oil and gas field surveyor Veritas DGC (VTS) was sharply higher after French rival Compagnie Generale de Geophysique (GGY) said it would buy the company for $3.1 billion.
Meanwhile, Phelps Dodge (PD) was higher as the copper producer said it agreed with takeover target Inco (N) to call off their planned $17.4 billion deal.
Personnel changes were also in focus. Viacom (VIA.B) was lower after the entertainment company announced Tom Freston resigned as chief executive, to be replaced by Philippe Dauman.
After the close, Ford (F) named Alan Mulally, previously an executive vice president with Boeing (BA), as the automaker's new president and CEO. Bill Ford will remain as executive chairman.
Elsewhere, Intel (INTC) was modestly higher amid reports the chipmaker could cut at least 10,000 jobs as a cost-cutting measure.
In analyst calls, Caterpillar (CAT) was higher after Merrill Lynch raised its recommendation on the stock from neutral to buy. Shares of Lehman Brothers (LEH) rose after UBS upgraded the stock from neutral to buy.
The economic calendar was light. U.S. home prices rose at a 4.7% annual rate in the second quarter, the slowest gain since 1999, the Office of Federal Housing Enterprise Oversight said. Data releases due this week include revised second-quarter productivity data, the Federal Reserve's Beige Book report, and the Institute for Supply Management's non-manufacturing business activity index.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index slipped 4.9 points, or 0.08%, to 5,981.7. Germany's DAX index lost 25.65 points, or 0.43%, to 5,884.07. In Paris, the CAC 40 index was down 30.39 points, or 0.58%, to 5,172.85.
Asian markets ended mixed. Japan's Nikkei 225 index advanced 27.89 points, or 0.17%, to 16,385.96. In Hong Kong, the Hang Seng index shed 75.08 points, or 0.43%, to 17,438.8. Korea's Kospi index gained 2.18 points, or 0.16%, to 1,361.24.
Treasury yields ticked higher ahead of Wednesday's release of the Federal Reserve's beige book report. The 10-year note fell in price to 100-23/32 for a yield of 4.78%, while the 30-year bond dropped to 93-10/32 for a yield of 4.93%.