Wall Street Starts the Week on a Cautious Note; Treasuries Stabilize
Stocks closed mixed Monday after a weak start, and Treasury bond yields pulled back.
The economic news was upbeat, but some analysts said markets were moved more by technical factors than by fundamentals.
The stock market slid at the opening despite the government’s report that factory orders jumped 1.7% in June -- another sign that the long-suffering manufacturing sector is recovering. The Dow industrials fell as much as 105 points early on.
But buyers quickly jumped in, and the market edged higher for the rest of the session. The Dow ended with a gain of 32.07 points, or 0.4%, to 9,186.04.
The Standard & Poor’s 500 index closed up 2.67 points, or 0.3%, at 982.82.
The Nasdaq composite also rebounded from its lows but still ended in the red, down 1.56 points, or 0.1%, at 1,714.06.
Though blue-chip indexes were positive, falling stocks outnumbered winners by 21 to 12 on the New York Stock Exchange and by 18 to 13 on Nasdaq. Trading was moderate.
“It is all technical....There is no news to account for it,” Peter Cardillo, president of Global Partner Securities Inc. in New York, said of the day’s action.
Stocks began to recover after the S&P; 500 fell to 967, within five points of its lowest level of the last two months. That may have triggered buying by market players trying to profit from moves within a relatively narrow trading range.
“We got to the lower end of our trading range, and the bond market is finally stabilizing for the first time in weeks,” Neil Massa, a trader at John Hancock Advisers, told Bloomberg News, explaining the day’s action.
Yields on longer-term Treasury bonds, which hit one-year highs last week, eased Monday. The 10-year T-note dipped to 4.28% from 4.38% Friday.
The bond market today faces the first leg of the government’s $60 billion in note sales this week. The Treasury will sell $24 billion in three-year notes today. Gains in Treasuries may be limited by investors’ fear of suffering additional losses, analysts said. The surge in yields since mid-June has slashed the value of older bonds.
“People believe there’s value in the market, but they’re scared by the price action,” Peter McTeague, Treasury market strategist at RBS Greenwich Capital Markets in Greenwich, Conn., told Bloomberg News.
In other trading Monday, crude oil prices fell after rising sharply Friday. Oil dropped after the U.S. Army Corps of Engineers said it soon would complete repairs on an Iraqi pipeline that was attacked last week.
Near-term oil futures in New York slid 47 cents to $31.84 a barrel.
Among the day’s highlights:
* Some telecom stocks were strong. Qwest Communications International jumped 34 cents, or 9%, to $4.13 after the local-telephone company said it was talking to several potential bidders for its mobile-phone network.
Verizon Communications rose $1.46 to $35.84. The company and unions representing 78,000 employees resumed contract negotiations. Elsewhere in the telecom sector, SBC Communications gained 45 cents to $23.85 and Qualcomm added 88 cents to $37.38.
* Mortgage-related stocks were mixed. NovaStar Financial slumped $5.19 to $56.20 on concerns its business would fall as mortgage rates rise. But another major lender, Countrywide Financial, jumped $2.12 to $67.32.
* WMS Industries soared $3.28 to $20.83 after brokerage Deutsche Bank raised the stock to “buy” on excitement over the firm’s new slot-machine system.
* Computer Sciences rose $2.02 to $42.75. Brokerage Jefferies upgraded the shares to “buy,” citing strong contract bookings.
