Stocks finished mixed Monday on light volume after giving back morning gains. The technology sector was the primary laggard due to a profit warning from EMC (EMC
), and a bearish sector report from Merill Lynch (MER
). Defensive and rate-sensitive groups including consumer staples,
utilities, and real estate were bucking the downtrend, says Standard & Poor's Equity Research.
On Monday, the Dow Jones industrial average rose 12.88 points, or 0.12%, to 11,103.55. The broader Standard & Poor's 500 index added 1.86 points, or 0.15%, to 1,267.34. The tech-heavy Nasdaq composite slipped 13.13 points, or 0.62%, to 2,116.93.
NYSE breadth was mostly positive, with 20 issues advancing for every 13 declining. NASDAQ breadth was 17-14 negative.
Some analysts are optimistic about second-quarter earnings season. "Earnings growth is expected to be 14% year-over-year, led by energy," says Goldman Sachs strategist David Kostin in a report. "We expect volatility around the second-quarter earnings season and macro data releases through the next Fed meeting on Aug. 8."
Investors awaited the start of second-quarter earnings season. After the close of trading, basic-materials bellwether Alcoa (AA
) posted a 62% increase in profit for the quarter, in line with Street forecasts.
Results are due later in the week from General Electric (GE
), Pepsi (PEP
) and Genentech (DNA
), among others.
Technology stocks were underperforming. EMC,
the biggest maker of corporate data storage equipment, said its quarterly earnings fell short of expectations as it misjudged
demand and did not stock enough inventory of a new product. It was the second consecutive quarter EMC missed its own targets. The stock was down 7%.
Chipmaker Advanced Micro Devices (AMD
) was lower after warning Friday of a drop in second-quarter revenue as compared to the first quarter. Rival Intel (INTC
) also lost ground.
Outside of earnings, M&A activity continued to percolate. Packaged-foods maker Kraft (KFT
) unveiled a $1.1 billion deal to acquire the Spanish and Portuguese units of United Biscuits and secure the rights to Nabisco trademarks in Europe, Africa, and the Middle East.
Retailer Foot Locker (FL
) was up as private-equity firm Kohlberg Kravis Roberts is reportedly a lead contender to buy the footwear chain, possibly in a bid with Apollo Management.
Among other stocks in the news, Disney (DIS
) was higher after grossing an estimated $132 million over the weekend from Pirates of the Caribbean: Dead Man's Chest.
Defense contractor General Dynamics (GD
) was modestly higher following a report that its shares are undervalued.
On the economic front, U.S. wholesale sales surged 1.6% in May. The bigger-than-expected increase bodes well for the outlook for second-quarter economic growth, says Action Economics. Meanwhile, consumer credit grew $4.42 billion in May.
Data releases due later in the week include June retail sales, May trade, June import and export prices, July preliminary consumer sentiment, and May business inventories.
In the energy markets Monday, August West Texas Intermediate crude oil futures fell 48 cents to $73.61 a barrel amid upbeat expectations for Iran talks.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index inched up 8 points, or 0.14%, to 5,896.9. Germany's DAX index advanced 24.47 points, or 0.43%, to 5,706.32. In Paris, the CAC 40 index was up 24.47 points, or 0.58%, to 4,982.48.
Asian markets finished sharply higher, helped by strong earnings reports from two Japanese banking giants. Japan's Nikkei 225 index rose 245.2 points, or 1.6%, to 15,552.81. In Hong Kong, the Hang Seng index added 144.03 points, or 0.88%, to 16,603.81. Korea's Kospi index rallied 25.36 points, or 1.99%, to 1,299.99.
Treasuries edged higher in price Monday. The 10-year note was higher at 100 for a yield of 5.130%, while the 30-year bond was flat at 89-31/32 for a yield of 5.169%.