U.S. stock indexes closed mixed Monday as energy and materials issues fell in step with a drop in commodities prices while American Express (AXP) and Merck & Co. (MRK) led the blue-chip Dow industrials higher.
The market's mixed performance came on the heels of last week's dismal June employment report and ahead of the second-quarter corporate earnings season, which will unofficially begin when Alcoa (AA) posts results Wednesday.
On Monday, the 30-stock Dow Jones industrial average finished higher by 44.13 points, or 0.53%, at 8,324.87. The broad Standard & Poor's 500-stock index gained 2.30 points, or 0.26%, to 898.72. The tech-heavy Nasdaq composite index declined 9.12 points, or 0.51%, to 1,787.40.
On the New York Stock Exchange, 18 stocks were lower in price for every 12 that advanced. Breadth on the Nasdaq was 17-10 negative. Trading was light.
Treasuries were lower on profit taking from Thursday's gains. The dollar index finished flat amid speculation about what will happen at this week's G8 meeting in Italy.
Crude oil futures fell on demand worries, helping send shares of energy firms like Exxon Mobil (XOM) and Chevron (CVX) lower.
There were no major economic reports scheduled for release Tuesday. Traders were awaiting weekly initial jobless claims on Thursday and the University of Michigan Consumer Confidence index for July on Friday.
"After returning from the July 4 holiday break, investors will have to assess whether upcoming data, corporate earnings and Treasury-market supply will shed even more rain on their parade," says Action Economics.
The Institute for Supply Management reported Monday that its Nonmanufacturing Report on Business climbed to 47 in June from 44 in May. The market had expected a smaller improvement, to 45.7. The index remained below 50, showing continuing decline but at a slower pace. The index has been below 50 for nine months, but the index is now at its highest level since September. Employment rose to 43.4 from 39.0, while business activity improved to 49.8, near break-even, from 42.4.
The news is encouraging, especially after the worse-than-expected rise in the manufacturing index last week, according to S&P Economics.S&P MarketScope notes that market players were disturbed by news that U.S. Vice President Joseph Biden said the Obama Administration misread just how bad the economy was when in took the helm, but that another stimulus package is not favored for the moment.
Courts approved the sale of good General Motors Corp. assets into a new Treasury-run company on Monday, paving the way for its exit from bankruptcy in a couple of months.
S&P MarketScope reports that there was speculation the dollar's reserve position will be questioned at this week's G8 meeting but doubts anything concrete will evolve. India, China, France, and Russia questioned the greenback's reserve currency status over the weekend. Three Shanghai companies have agreed to settle trade contracts in yuan for the first time. The deals with customers in Hong Kong and Indonesia are worth an estimated $2 million. The People's Bank of China has arranged a total of CNY650 billion to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea, via currency swaps.
Among companies in the news Monday, Bank of America (BAC) says its board has authorized about $713 million in dividend payments to the U.S. government under the Troubled Asset Relief Program (TARP).
LDK Solar (LDK) sees second-quarter wafer shipments of 220 megawatts (MW) to 230 MW, vs. previously issued guidance of 200 MW to 220 MW; its sees $215 million-$225 million in second-quarter revenue. The company aslos noted that it had secured a loan in the aggregate principal amount of $73 million, with a term of one year, from The Export-Import Bank of China. It also secured a loan in the aggregate principal amount of $73 million, with a term of three years, from Huarong International Trust Co., Ltd. to support its polysilicon plant construction.
Regis Corp. (RGS) announced that fourth-quarter revenue decreased 2.5% to $625 million, with same-store sales falling 4.0%. The company plans to offer 11.5 million common shares, with underwriters receiving an option to purchase up to an additional 1.725 million common shares. The company also said it intends to offer concurrently $125 million of convertible senior notes due 2014, with underwriters receiving an option to purchase up to an additional $18.75 million.
PepsiCo (PEP) announced that it plans to invest $1 billion in Russia over three years, together with its partner Pepsi Bottling (PBG).