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U.S. Stocks Ease Off Highs as Mixed Economic Data Weigh

NEW YORK (TheStreet) -- Major U.S. stock markets were range-bound, trading near the flat line Monday on very slow volume as investors continued to process the heavy set of economic reports from the past week and awaited speeches from Federal Reserve officials on their outlook for the central bank's stimulus program.

The S&P 500 fell 0.15% to settle at 1,707.14. The Dow Jones Industrial Average declined 0.3% to finish at 15,612.13.

"The markets are ... muddling along and digesting the data," Michael Serio, the Denver, Colo.- based regional chief investment officer for Wells Fargo Private Bank said in a phone interview. The private bank has $170 billion in assets under management. "It's going to take a couple of days to digest the data" and the main focus continues to be "employment, employment, employment."

Both the Dow and S&P hit record closing highs Friday despite a weaker-than-expected July employment report and speculation the Fed may not begin cutting back on its stimulus program following the bank's September meeting.

Serio said the Fed's tapering of its bond-buying stimulus measures is more likely to begin towards the end of the year rather than in September or October. "Until they hit that magical 7% unemployment rate, I don't think the Fed's in any rush to slow their bond-buying program," he said.

The Nasdaq ticked up 0.09% to 3,692.95.

Apple (AAPL) shares lent some support to the markets Monday, gaining 1.49% to $469.45. The company received a bit of a reprieve over the weekend from an unlikely source: President Barack Obama. President Obama's trade representatives on Saturday vetoed an International Trade Commission ban on the iPhone 4 and iPad 2. The move hurt Samsung, costing the South Korean giant $1 billion in market cap in South Korean trading.

Tyson Foods (TSN) shares extended support as well. Shares tacked on 4.14% to $29.69 after the meat processor posted quarterly earnings of 69 cents a share on revenue $8.731 billion, beating the average analyst estimate of 60 cents a share on revenue of $8.65 billion amid record chicken segment results.

Cliff Natural Resources (CLF)also posted gains, advancing more than 2% to close at $21 after the international mining and natural resources company announced after the close of trading on Friday a tentative agreement with the United Steelworkers Union for a new three-year labor contract offer that will cover about 300 workers at the Cliffs' Bloom Lake mine in Fermont, Quebec.

In other corporate headlines, HSBC (HBC) fell 4.49% to $55.37 even after the company announced healthy earnings growth with continued improvement in credit quality and success in its efficiency program.

The world's second-largest bank also said that its net interest income declined to $17.819 billion during the first half from $19.376 billion during the first half of 2012, reflecting the difficult interest rate environment and asset sales.

Serio describes last week's economic events as mixed. For instance, while the second-quarter gross domestic product number was better than expected, it came off of downward revisions in the prior quarter. He said that employment is "still not good," while manufacturing was good and housing was very strong. This slower week in data will include a consumer credit report on Wednesday and international trade balance figures on Tuesday.

Serio expects the continuation of increasing credit mostly in non-revolving credit, which is largely in auto loans and a good sign showing that Americans are going out and buying cars. However, he predicts that U.S. export growth will remain weak as the country's largest trading partners continue to see slow economic growth; in fact net exports have detracted from real GDP this year and are not expected to make a meaningful contribution to GDP in the coming quarters.

U.S. services sector conditions improved in July, according to the Institute for Supply Management's non-manufacturing Index Monday, which showed a rise to a higher-than-expected 56% versus 52.2% in June and the consensus estimate of 53%. However, the employment index component of the report slipped 1.5 percentage points to 53.2%.

Late morning, Dallas Fed President Richard Fisher made a reference to Greek mythology, telling an audience in Portland, Ore. that the Fed has created an extremely complex "monetary Gordian Knot" with each new round of quantitative easing. He said that the central bank should stop building upon this knot and start unwinding it carefully to prevent an unleashing of market havoc. His suggestion has been that the first move on tapering should be made this fall but that it remains to be seen on whether the other policymakers generally vote to agree with him.

A number of other Fed officials are also scheduled to give speeches throughout the week, including Chicago Fed President Charles Evans on Tuesday as well as Philadelphia Fed President Charles Plosser and Cleveland Fed President Sandra Pianalto on Wednesday.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.>

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