The Dow ended with a slight gain Monday, pulling closer to 10,000. Investors braced for an onslaught of earnings reports later in the week
U.S. stocks closed narrowly mixed Monday, with Nasdaq issues lagging the broader market in slow trading. The Dow Jones industrial average pulled back from an earlier advance toward the 10,000 level.
On Monday, the 30-stock Dow Jones industrial average finished higher by 20.86 points, or 0.21%, at 9,885.80. The broad Standard & Poor's 500-stock index was up 4.70 points, or 0.44%, to 1,076.19. The tech-heavy Nasdaq composite index edged lower by 0.14 points, or 0.01%, to 2,139.14.
On the New York Stock Exchange, 16 stocks were higher in price for every 14 that declined. Breadth on the Nasdaq was 14-12 positive.
The market opened higher, extending recent gains with the help of a third-quarter profit posted by Royal Philips Electronics (PHG). But its gains were later pared by profit takers, who warily eyed a slew of earnings reports due this week from IBM (IBM), Google (GOOG), Intel (INTC), JPMorgan Chase (JPM), Goldman Sachs Group (GS), Citigroup (C), Bank of America (BAC), and General Electric (GE), among others.
Also, some investors were absent, as Monday marked the U.S. Columbus Day holiday; the Treasury market was closed in observance of the holiday.
Among supportive factors for stocks Monday: An unexpected third-quarter profit posted by Royal Philips Electronics (PHG), which supports the theory that the economic recovery is under way.
Another bullish analyst note on Google (GOOG), this time from Goldman Sachs, aided sentiment Monday.
Recent rallies in equities have come as investors continue to bet that the economy is on the rebound, with positive implications for corporate earnings.
"There is major scope for disappointment [in third-quarter earnings], because analysts have raised their forecasts substantially in the last few weeks, particularly in the tech sector," wrote analysts from BGC Financial L.P. in a note Monday.
The dollar index sank again Monday. S&P Economics expects the greenback to continue to slide slowly over the next year as the continued trade deficit and convergence of interest rates with Europe maintain downward pressure on the dollar, and with Europe and Japan strengthening and the European Central Bank (ECB) done with cutting interest rates.
The weakness in the dollar aided commodities Monday. December gold futures were up $7.90 to $1,056.50 per ounce in late trading, a bit shy of the $1,062.70 all-time high, as the dollar drifted lower.
November West Texas Intermediate crude oil futures were up $1.35 to $73.12 per barrel in late afternoon trading. Market watchers said strength in U.S. and European stock prices bolstered energy futures, with the gains reflecting confidence in the global economic recovery.
Speaking at the National Association for Business Economics (NABE) annual meeting over the weekend, St. Louis Federal Reserve President James B. Bullard warned that inflation risks over the medium-term might be higher than widely believed, according to Action Economics. He suggested policymakers might be putting too much emphasis on the belief that the recession implies a big output gap that will help temper inflationary pressures, even in the face "extraordinarily accommodative monetary policy."
Russia's economy will shrink by 7.5% in 2009, President Dmitry Medvedev has said - but claimed Kremlin intervention had prevented a worse decline. Russia, which is heavily reliant on oil exports, has been hit by the sharp fall in energy prices. Medvedev said the decline was "very serious" and admitted the government had been surprised at how severely Russia had been hit by the crisis. However, the predicted slide in GDP was less than earlier predictions. "The real damage to our economy was far greater than anything predicted by ourselves, the World Bank and other expert organisations," Medvedev told Russian television. But he said that measures to save jobs and stabilise the country's banking sector had paid off.
Among companies in the news Monday, Philips posted third-quarter net income of €174 million, vs. €57 million, despite an 11% sales decline.
Shares of Google were poised to climb after Goldman Sachs raised its earnings estimates and price target for the stock.
Black & Decker (BDK) said it expects third-quarter earnings per share (EPS) to be about $0.91, vs. previous guidance for EPS of $0.35-$0.45. The company now expects to report a sales decline of 23% and operating margin of about 7.5%. Black & Decker said a lower tax rate, due to certain favorable tax adjustments recognized in the quarter, is expected to contribute about $0.14 to EPS vs. previous guidance.
Fastenal (FAST) posted third-quarter EPS of $0.32, vs. $0.49 EPS one year earlier, on 22% lower sales.
Digital River (DRIV) announces that Symantec (SYMC) has notified the company that it will not extend its existing e-commerce agreement. Also, Digital River said it expects third-quarter results will be at or slightly above the top end of the guidance it provided on July 29, 2009.
Tuesday Morning (TUES) posted 5.8% lower first-quarter same-store sales and 4.3% lower total net sales. Based on first-quarter sales results, the company expects a loss per share in the quarter of $0.11-$0.13. Wall Street was looking for loss of $0.14.
Ebix (EBIX) set a 3-for-1 stock split.