The tech-packed Nasdaq eked out a small gain on Monday while the broader market ended lower as investors faced the second quarter's first trading day with worries about the strength of corporate profits and the escalating violence in the Middle East.
The Nasdaq Composite index gained 17.27 points or 0.94%, to 1,862.62. But the Dow Jones industrial average closed off 41.24 points, or 0.40%, to 10,362.70, after posting triple-digit losses earlier in the session. The broader Standard & Poor's 500 Index eased 0.85 of a point, or 0.07%, to 1,146.54.
On Tuesday, Wall Street will be looking at a February report on U.S. factory orders for more signs that the economy is ermerging from its slump. Orders are expected to have risen by 0.9% in February vs. 1.6% in the previous month. Meanwhile, factory inventories are expected to have fallen 0.6%.
Among some of the companies expected to report quarterly earnings on Tuesday are retailers Circuit City (CC) and Best Buy (BBY).
Investors on Monday kept a close eye on the deteriorating situation in the Israeli-Palestinian conflict. There is growing concern that turmoil in the region will threaten the supply of crude oil. Crude prices rose to highs not seen in more than six months.
Losses in the broader stock market came despite more evidence the U.S. economy is emerging from its slump. Wall Street remains concerned that the economic recovery will not be fast enough to justify the still robust stock market valuations.
The Institute for Supply Management Purchasing Manager's (ISM) index rose to 55.6 in March -- its highest level since February 2000 -- from 54.7 in February. Any reading above 50 in the index, a key gauge of manufacturing activity, indicates expansion.
Giving the techs a lift was Sun Microsystems (SUNW). The computer server maker was up after Merrill Lynch said the company would likely post higher revenues in its quarter ended March 31 as sales of some products hold up.
But negative comments from analysts put many investors in a selling mode. Merrill Lynch downgraded its rating on a number of retailers, including Dow component Wal-Mart (WMT). Many large retailers reported disappointing sales for last week.
And Prudential Securities lowered its investment rating on Ford Motor Co (F) to "sell" from "hold".
In the technology sector, Finnish telecommunications giant Nokia (NOK) was cut to "buy" from "strong buy" by Credit Suisse First Boston.
Meanwhile, computer security provider RSA Security Inc. (RSAS) warned that first-quarter revenues would fall short of prior targets. The company also said it would post a loss for the quarter instead of a year-earlier profit.
In merger news, Cendant Corp. (CD), a franchising company, said it would buy time-share properties company Trendwest Resorts Inc. (TWRI) for about $1 billion.
Stock performance was mixed in the first quarter. The Dow gained 3.8%, the S&P 500 was flat, and the NASDAQ lost 5.4%.
U.S. Treasuries were lower in price on the latest strong economic data, which indicate the Federal Reserve could raise interest rates.
U.S. construction spending rose 1.1% in February following a downwardly revised 0.8% gain (previously +1.5%) in January. The increase was due to a 1.7% jump in private spending, which was in turn boosted by a 3.5% surge in residential spending. Nonresidential spending fell 3.0%. As for public construction, spending dipped 0.5% after a 5.5% surge. Overall, the figures were consistent with the strength evident in the residential housing market this year.
European stock markets were closed in observation of Easter Monday.
In Asia, Japan's benchmark Nikkei 225 index closed up 3.76 points, or 0.03%, at 11,028.70. Hong Kong's market was closed for Easter.