Updated from 4:16 p.m. EDT
U.S. stocks were volatile again Monday and closed mixed, as traders weighed cautious comments from
officials against positive news out of the tech sector.
Dow Jones Industrial Average
swung in a 160-point range before ending up 14.47 points, or 0.11%, at 13,127.85. The
slipped 1.85 points, or 0.13%, to 1451.70, and the
was off 6.59 points, or 0.26%, at 2559.11.
"This was typical behavior of a nervous market this is still awaiting more news from the Fed," said Peter Cardillo, chief market economist with Avalon Partners. "A lot of today was technical movement. We're probably going to have an indecisive market that is held in captivity until we get that Fed decision next week."
Breadth was slightly negative to start the week. On the
New York Stock Exchange
2.74 billion shares changed hands Monday, as decliners topped advancers by an 3-to-2 margin. Volume on the Nasdaq reached 1.78 billion shares, with losers outpacing winners nearly 6 to 5.
With little economic data on the docket, traders were focusing on remarks from several Fed bankers. San Francisco Fed President Janet Yellen told the National Association for Business Economics that the recent financial market turmoil will prolong the housing sector adjustment.
"I see significant downward pressure based on recent data indicating further weakening in the housing sector and the tightening of financial markets," said Yellen. "A big issue is whether developments in the relatively small housing sector will spread to the large consumption sector, perhaps through declines in house prices."
If the decline in house prices occurs in the context of rising unemployment, "the risks could be significant," she said.
Over the weekend, Philadelphia Fed President Charles Plosser somewhat lowered expectations for a rate cut at the next Federal Open Market Committee meeting on Sept. 18 as he delivered a speech in Hawaii.
"Disruptions in financial markets can be addressed using the tools available to the Fed without necessarily having to make a shift in the overall direction of monetary policy," he said.
On Tuesday, Fed Chairman Ben Bernanke will speak in Germany about recent developments in the global financial system.
Most investors are looking for a reduction of at least 25 basis points in the fed funds target rate when the central bank meets next week.
"Investors will be listening for any indication that the Fed will move and is now focused more on the economy than inflation," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Gross domestic product estimates for the third quarter are likely to be revised down from the current 2.6% consensus, especially in light of the recent data, but we are still a long way from calling this a recession."
During the prior session, the major averages tumbled after a government report showed that the domestic economy unexpectedly lost jobs in August. The Dow slumped 249.97 points, or 1.87%, to 13,113.38, and the
fell 25 points, or 1.69%, to 1453.55. The Nasdaq sank 48.62 points, or 1.86%, to 2565.70.
"The very weak jobs report on Friday moved the Federal Reserve to front and center in the debate on economic growth," said Paul Nolte, director of investments with Hinsdale Associates. "While a negative reading on 'job creation' does not necessarily mean we are entering a recession, the likelihood of one has increased."
Homebuilders dropped following Yellen's speech. The Philadelphia Housing Sector Index sank 2.2%, as
all slid by 2.1% or more.
Several finance names were also lower. Embattled lender
fell 5.5% after saying it would slash up to 20% of its workforce, or 12,000 jobs. The eliminations will occur "in areas most impacted by lower mortgage market origination volumes," the company said. Countrywide lost $1 to $17.21.
U.S. Treasury securities, meanwhile, rallied. The 10-year bond gained 16/32 in price, cutting the yield to 4.32%. The 30-year note added 30/32, yielding 4.64%.
Tech stocks got a lift from
Advanced Micro Devices
, whose shares tacked on 2.6% after the company unveiled its new Barcelona microchip, which it expects to help seize market share from rival
. AMD ended the day with a gain of 33 cents at $12.94.
Separately, Intel raised its third-quarter revenue forecast, saying it should have a top line of $9.4 billion to $9.8 billion, up from its prior outlook of $9.0 billion to $9.6 billion. Shares finished down 12 cents, or 0.5%, at $25.35.
was another tech leader, rising 3.8% after the company announced it has sold 1 million iPhones. Last week, shares sold off after Apple reduced the retail price on the 8-gigabyte model by $200. Apple finished up $4.94 at $136.71.
fell 4% after Lehman Brothers downgraded the stock to underweight from equal weight, citing softening demand for the company's Treo phone. The stock eased 62 cents to $14.75.
Outside of tech,
was also making news after the company said it would be testing its toys for lead content. The move comes after toymaker
issued three separate recalls for toys made in China that were found to have unsafe levels of lead. Disney dipped 3 cents, or 0.1%, to $33.56.
Elsewhere, the October front-month crude contract added 79 cents to finish at $77.49 a barrel. Gold futures added $2.50 to close at $712.20 an ounce, while silver was off 6 cents at $12.70 an ounce.
Markets overseas were mostly lower. Japan's Nikkei 225 plunged 2.2% overnight. The Paris CAC 40, London's FTSE 100 and Germany's Xetra Dax were off 0.4% or more.