Tech Nudges Nasdaq Higher; Dow Dips
Updated from 4:13 p.m. EDT
New York's major averages went out mixed Monday as traders weighed uplifting news out of the tech space against financial-sector disappointments and another surge in oil prices.
The blue-chip indices, which spent the entire day in the red, threatened to break through the flat line in the last hour of trading but ultimately closed down around 0.2% apiece. The
Dow Jones Industrial Average
dropped 24.34 points to 12,825.02 -- up from nearly a 100-point slide earlier -- and the
S&P 500
shed 2.16 points to 1388.17.
The
Nasdaq Composite
, however, was able to claw up 5.07 points, or 0.21%, to 2408.04, thanks to rising strength in tech shares, most notably in
Apple
(AAPL) - Get Report
.
Kenny Landgraf, president and founder of Kenjol Capital Management, said the lackluster action "doesn't really surprise me, with the run-up we had Friday and all of last week."
He also pointed out that the major averages broached the top end of the range in which the market had been stuck for most of 2008. "And if that holds, obviously that's a tough area to continue to be short," he said.
Breadth was poor. Volume reached 1.69 billion shares on the
New York Stock Exchange
, with decliners beating advancers by nearly a 3-to-2 margin.
Contributing to the downward pressure was Dow component
Bank of America
(BAC) - Get Report
, which reported that its quarterly profit
to $1.21 billion, or 23 cents a share, missing Wall Street's dour expectations for a 41-cent profit. The bank's loan-loss reserve ballooned to $4.78 billion, and the bank wrote off $1.47 billion in collateralized debt obligations and $439 million in leveraged loans.
Also, the bank said it's concerned with the U.S. consumer outlook, given such factors as increasing unemployment and the rising costs of fuel and food.
Still, as the writedowns were significantly lower than the last quarter's total of $5.28 billion, and as the bank didn't disclose any other surprises, shares were down just 2.5%.
"Lately, with the banks, if they're terrible but less so than expected, it's taken as good news," said Landgraf. "People also know that we're a lot closer to the end of this
writedown cycle than the start."
Georges Yared, chief investment strategist with Yared Investment Research, additionally pointed to the fact that the writedowns will help to continuing clearing BofA's balance sheet. The report, he said, "really wasn't that bad after all. It wasn't something you want to be very proud of, but it's not something that was really horrible."
Meanwhile,
National City
(NCC)
shares plunged 27.6% after the bank confirmed it will
for a steep discount of $5 a share to a consortium of private investors.
"That one hurts," remarked Yared, "That's an old lion, a Cleveland bank that's been around for 150 years."
National City also said it swung to a first-quarter loss of $171 million and chopped 20 cents off its dividend to a penny a share. The lead investor in the cash-infusion deal will be Corsair Capital, which was formerly a part of
JPMorgan Chase
(JPM) - Get Report
.
Similarly, regional bank
Colonial Bancgroup
(CNB)
announced a falling profit, a slashed dividend, and plans to offer 25 million newly minted shares for an as-yet-unspecified price. Shares were sliding 12.2%.
The
NYSE
Financial Sector Index fell 1%. The KBW Bank Index sank 2.7%.
On the upside,
Jefferies
(JEF) - Get Report
tracked higher after agreeing to buy 10 million shares of
Leucadia National
(LUK)
in exchange for
$100 million in cash and a 13.7% piece of itself
. Jefferies also swung to a surprise loss of $60.5 million, or 43 cents a share. The stock finished up fractionally at $15 after spending most of the day in positive territory.
Shares of Apple also got a boost after Citigroup padded the company's first-quarter earnings estimate by 9 cents to $1.23 a share while RBC Capital lifted the stock's price target by $15 to $190. The iPod and Mac maker is due to report on Wednesday. Shares rose 4.4% at $168.16 to prop up the Computer Hardware Index, which lately spiked 2.3%.
Fellow tech name
Microsoft
(MSFT) - Get Report
, a Dow member that should release its first-quarter numbers on Thursday, was recently gaining 1.4%.
But
Caterpillar
(CAT) - Get Report
helped weigh on the Dow after Credit Suisse and Wachovia each cut the stock to neutral-equivalent ratings, citing valuation. Shares of the bulldozer maker pared back a bit from Friday's big gains, recently losing 2.3% at $83.33.
As for oil, crude futures again went into uncharted territory, hitting a new high of $117.76 before settling at $117.48 -- a gain of 79 cents -- after a Nigerian militant group attacked two of the country's oil pipelines, disrupting crude supply and pumping up a market already inflated by rampant speculation. The attack has suspended production on 169,000 barrels of oil a day, according to a
Royal Dutch Shell
(RDS.A)
joint venture, which is believed to operate the pipelines with
Chevron
(CVX) - Get Report
, according to reports.
Separately, Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said he doesn't believe that upping oil production would ease surging prices, according to reports, saying the main driver is the declining U.S. dollar. The greenback weakened against both the euro and the yen Monday, closing at $1.5910 and 103.20, respectively.
On that matter, however, Landgraf is at least cautiously optimistic. "I'm not going to say we've found a bottom here," he said, "but, at these levels, it would take some effort to go a lot further."
Gold futures rose $2.40 to $917.60 an ounce.
As for commodities-related stocks,
Arch Coal
(ACI) - Get Report
jumped 6.5% after sailing past first-quarter estimates and lifting its full-year outlook.
Halliburton
(HAL) - Get Report
, an oil-service and technology firm, ended slightly higher after
rising earnings
that met Street targets. Oilfield-services company
Weatherford International
(WFT) - Get Report
beat by a penny, but shares still declined 1.3%.
Monday's session also saw mixed results from the health-care sector. Dow component
Merck
(MRK) - Get Report
doubled its first-quarter income, mostly thanks to a $1.4 billion distribution from partner
AstraZeneca
(AZN) - Get Report
. Stripping that out, along with other special items, income still beat Thomson Financial's analyst consensus with 89 cents a share. The company also
reaffirmed its 2008 guidance
. Merck shares ended down 13 cents at $39.63.
But fellow drugmaker
Eli Lilly
(LLY) - Get Report
gave back 4.8% after
missing projections
, even as its adjusted quarterly profit climbed 11% from a year ago.
Amylin Pharmaceuticals
(AMLN)
slid 10.3% after likewise
with a widening first-quarter loss.
On the flip side, Swiss drugmaker
Novartis
(NVS) - Get Report
posted a better-than-expected first-quarter profit, as did
Quest Diagnostics
(DGX) - Get Report
. Shares added 3.4% and 7.7%, respectively.
As the generally negative sentiment persisted among equities, however, Treasury prices reversed their earlier downward momentum. The 10-year note pared its losses back to 1/32 in price, yielding 3.71%. The 30-year bond was adding 7/32 in price to yield 4.48%.
Elsewhere, the
Bank of England
today said it will
in government bonds for mortgage-backed securities, following a similar move by the
Federal Reserve
last month in the wake of
Bear Stearns'
(BSC)
near-collapse.
Overseas markets were mixed. The Nikkei 225 in Tokyo jumped 1.6% overnight at 13,697, and the Hang Seng Index in Hong Kong surged 2.2% to 24,722. Europe fared worse, though, as London's FTSE 100 lost 0.1%, and Germany's Xetra Dax sank 0.8%. The Paris Cac slid 1%.