Stocks End Mixed in Nervous Session
Stocks finished an uneasy session mixed Monday as investors grew nervous ahead of the second-quarter earnings season. Weakness in the technology sector dragged down the Nasdaq composite index.
Expectations for solid quarterly results helped the market to an early advance, but the enthusiasm waned throughout the session, prompting some traders to lock in profits. Alcoa -- the first major U.S. company to report -- saw its shares sag after releasing results after the close.
Although analysts forecast another round of double-digit profit growth from companies in the Standard & Poor’s 500 index, some said that strong results might have already been priced into the market and that lingering confusion about interest rates and economic growth were keeping stocks from gaining.
“The nice thing about earnings is that they’re probably going to be higher,” said Ed Peters, chief investment officer for PanAgora Asset Management. “Unfortunately, that’s old news. Good earnings have already been discounted -- people are looking at what’s going to happen next.”
Several acquisitions were giving stocks some support. Kraft Foods agreed to buy the Spanish and Portuguese units of United Biscuits for $1.07 billion, and Kimco Realty acquired Pan Pacific Retail Properties for $2.9 billion.
The Dow added 12.88 points, or 0.1%, to 11,103.55, after gaining as much as 84 points earlier.
Broader stock indicators were mixed. The S&P; 500 rose 1.86 points, or 0.2%, to 1,267.34, and Nasdaq dropped 13.13 points, or 0.6%, to 2,116.93.
Advancing issues led decliners by about 5 to 3 on the New York Stock Exchange. The Russell 2,000 index of smaller companies slipped 0.2 of a point to 709.08.
Bonds were flat after last week’s rally, with the yield on the 10-year Treasury note unchanged at 5.13%. The U.S. dollar was little changed against other major currencies. Gold futures fell $8.70 to $624.10 an ounce.
Wall Street’s persistent concerns about the economy squelched excitement over earnings. Although companies were largely expected to show upbeat results, recent profit warnings from Advanced Micro Devices, 3M and EMC sparked fears that higher interest rates have contained inflation but are hurting economic growth.
“I think the key thing will be earnings,” John Caldwell, chief investment strategist for McDonald Financial Group, said of whether stocks will rise or fall in the coming weeks. “The numbers look good, but enough people are on edge after 3M and EMC.”
Crude futures fell as energy traders took profits from the recent surge in prices, but worries about Iran and vehicle fuel demand were expected to support the market. A barrel of light crude lost 48 cents to $73.61 in New York trading.
On the economic front, a bigger-than-forecast rise in wholesale inventories last month triggered hopes that easing demand will help cool the economy. Although the 0.8% increase was greater than economists’ predictions of 0.5%, that was sharply less than the 1.3% gain in April.
In other market highlights:
* Aluminum producer Alcoa said soaring metal prices helped its profit swell 62%, but revenue still missed Wall Street expectations. Shares ended the regular session 14 cents lower at $33.41, and plunged below $32 in after-hours trading.
Other companies reporting this week include PepsiCo, which posts its results Thursday. Earnings from General Electric are due Friday.
* Profit warnings from Kronos, EMC and AMD pulled tech stocks lower. Kronos sank $5.16 to $29.46, EMC lost 77 cents to $10.41 and AMD slumped $1.05 to $22.51.
* Along with the purchase of United Biscuits’ Iberian businesses, Kraft is buying the rights to Nabisco trademarks in the European Union, Eastern Europe, the Middle East and Africa. Kraft added a penny to $30.21.
* Shopping center operator Kimco will also assume about $1.1 billion of debt from Pan Pacific, which owns about 140 retail properties. Kimco rose 54 cents to $37.41, and Pan Pacific slid 65 cents to $69.35.
* WPS Resources said it would take over Peoples Energy for $1.52 billion in stock. WPS rose 53 cents to $48.51, and Peoples Energy gained 42 cents to $39.09.
* CVS advanced 85 cents to $31.31. The No. 2 U.S. drugstore chain said same-store sales increased 8.8% in the second quarter, more than its May estimate of as much as 8%. The gain sent shares of rivals Walgreen and Rite Aid higher. Walgreen rose 88 cents to $46.73. No. 3 Rite Aid increased 17 cents to $4.40.
* DuPont and Boeing helped the Dow average’s climb.
DuPont, the third-largest U.S. chemical maker, rose 24 cents to $40.78. It said the Brazilian Ministry of Agriculture chose the company’s Qualicon RiboPrinter for a food safety program. Boeing gained 36 cents to $80.35 after rival Airbus won fewer aircraft orders in the first half of the year than Boeing.
* Overseas, Japan’s Nikkei-225 stock average jumped 1.6%. Britain’s FTSE-100 gained 0.1%, Germany’s DAX index added 0.4% and France’s CAC-40 was higher by 0.6%.
Bloomberg News was used in compiling this report.