The major stock indices all got on track Monday thanks to good fundamental news and a bevy of analyst upgrades ahead of earnings season. But the late-session fade that bedeviled stocks last week re-emerged, just with reduced ferocity. After trading as high as 10,663.74, the Dow Jones Industrial Average dropped briefly into negative territory after 3 p.m. and then recovered to close up 17 points, or a 0.2% gain, to 10,621.03. The Nasdaq Composite hit resistance when it crossed 2111 intraday and finished up 0.4% at 2097.04. The S&P 500 gained 0.3% to 1190.24. Breadth was positive, with 60% of New York Stock Exchange issues and 52% on the Nasdaq ending up with gains. But it's hard to have much conviction about a market that tails off late day after day without much explanation. The fade struck all the usual candidates that have been leading the market downward this year. The Philadelphia Stock Exchange's Semiconductor Index, for example, was as high as 511.55 by midafternoon, a 1% gain, before dropping to 406.25 at the close, a 0.3% loss. The fade hit even the strongest groups of the day. Fund manager Ron Baron, quoted in Barron's, and a report on Hovnanian ( HOV) by UBS analyst Margaret Whelan stirred excitement in the homebuilding sector, which dropped last week. The Philadelphia Housing Index hit a high of 464.36 before dropping to close at 460.72 on Monday, still an impressive 2% gain. Hovnanian added almost 6%. Similarly, biotech stocks jumped and then faded on news that the Food and Drug Administration approved American Pharmaceutical Partners' ( APPX) new breast cancer drug. American flew up 28% while the Nasdaq Biotech Index hit 758.96 before closing at 751.22, still holding a 1.2% gain. Economic reports were slight and the yield on the 10-year Treasury note finished nearly unchanged at 4.28%.
M&A No Panacea
There was talk that the spate of mergers and acquisitions activity on Monday was giving stocks a boost, but it wasn't happening for companies closest to those making the deals. For example, regional wireless carrier Alltel ( AT) will acquire Western Wireless ( WWCA) in a stock and cash deal for more than $4 billion to create the fifth-biggest wireless operator in the country. Western Wireless rose 2.3% to $37.37, while Alltel slid 2.4% to $54.75.