Stocks finished lower in light trading Monday, as investors digested tumbling oil prices, a tech bellwether's analyst downgrade and some M&A news. A report on manufacturing activity was weaker than expected but stronger than some feared, while construction and pending homes sales posted surprising gains. Traders were taking profits amid the absence of last weeks' end-of-quarter portfolio adjustments and the Dow Jones industrial average's failed test of record highs, says Standard & Poor's Equity Research.
The Dow slipped 8.72 points, or 0.07%, to 11,670.35. The broader Standard & Poor's 500 index fell 4.52 points, or 0.34%, to 1,331.33. The tech-heavy Nasdaq composite dropped 20.83 points, or 0.92%, to 2,237.6.
NYSE breadth was slightly negative, with 18 issues declining for every 15 advancing. Nasdaq breath was 20-10 negative.
Oil prices resumed their recent downtrend. In the energy markets, November West Texas Intermediate crude oil futures closed down $1.88 at $61.03 a barrel as expectations for ample supplies persisted even after Venezuela and Nigeria agreed to cut output to keep up prices.
A heavy slate of economic data was also in focus Monday. The Institute for Supply Management's (ISM) index of manufacturing activity unexpectedly slipped to 52.9 in September from 54.5 in August. The soft reading follows a sharp decline in the Philadelphia Federal Reserve's index and a surprising jump in the Chicago purchasing manager's index.
However, the new orders and production components of the ISM report showed little or no change. "Overall, therefore, the report suggests relatively little change in the pace of manufacturing activity," says Goldman Sachs.
Separately, construction spending bounced 0.3% in August, its best showing in five months, after an upwardly revised 1% drop in July. The National Association of Realtors' index of pending home sales rose 4.3% to 110.1. Both figures were stronger than expected, says Action Economics.
A busy calendar could keep investors cautious this week, some analysts say. "Protecting profits for the year may behoove investors rather than taking big gambles," says Action Economics.
September auto sales highlight Tuesday's eocnomic docket. Data releases due Wednesday include August factory orders and the ISM's services index for September.
In corporate news, Apple (AAPL) was lower after Citigroup cut its recommendation on the computer maker from buy to hold.
Meanwhile, Wal-Mart (WMT) was lower after the retail giant over the weekend said September same-store sales rose 1.8%, below the midpoint of its forecasts. The company is also reportedly capping wages and using more part-time workers.
Deal activity grabbed some of the spotlight. Harrah's Entertainment (HET) was sharply higher as the casino operator said it received a $15 billion buyout offer from private equity firms Apollo Management and Texas Pacific Group.
Shares of Myogen (MYOG) surged as fellow drug-researcher Gilead Sciences (GILD) for $2.5 billion in cash, or $52.50 per share.
Elsewhere, LCA-Vision (LCAV) was down sharply after the laser-correction outfit late Friday lowered its full-year outlook.
European markets finished slightly lower. In London, the Financial Times-Stock Exchange 100 index edged down 3.3 points, or 0.06%, to 5,957.5. Germany's DAX index slipped 4.87 points, or 0.08%, to 5,999.46. In Paris, the CAC 40 index was down 6.88 points, or 0.13%, to 5,243.13.
Asian markets ended higher. Japan's Nikkei 225 index gained 126.71 points, or 0.79%, to 16,254.29. Korea's Kospi index added 2.81 points, or 0.2%, to 1,374.22. In Hong Kong, markets were closed for a holiday after the Hang Seng index on Friday advanced 12.48 points, or 0.07%, to 17,543.05.
Treasury yields slipped after the ambiguous economic reports. The 10-year note rose modestly in price to 102-02/32 for a yield of 4.61%, while the 30-year bond edged up to 95-30/32 for a yield of 4.76%. An intermediate-term uptrend that started in July is keeping sellers from getting the upper hand, says S&P.