Updated from 4:03 p.m. EDTStocks closed little changed Monday, ending a three-day streak of heavy losses, as cautious optimism about the situation in the Middle East was offset by an uneven helping of corporate earnings news. The Dow Jones Industrial Average, which rose more than 60 points earlier, finished up 8.01 points, or 0.07%, to 10,747.36. The S&P 500 closed down 1.71 points, or 0.14%, at 1234.49, and the Nasdaq Composite rose 0.37 point, or 0.02%, at 2037.72. The 10-year Treasury bond was unchanged in price to yield 5.07%, and the dollar rose against the yen and euro. The Dow was buoyed by McDonald's ( MCD), which posted a 5.9% rise in same-store sales for June. The restaurant operator also said its preliminary estimate for the second quarter is 67 cents a share, aided by its sale of Chipotle Mexican Grill ( CMG). The Thomson First Call estimate stands at 56 cents a share. McDonald's was higher by $1.68, or 5.1%, to close at $34.72. Elsewhere on the Dow, Boeing ( BA) and Hewlett-Packard ( HPQ) finished with gains of 2.2% and 1.4%, respectively. About 1.48 billion shares changed hands on the New York Stock Exchange, with decliners outpacing advancers by a 10-to-7 margin. Volume on the Nasdaq was 1.55 billion shares, and falling stocks beat those that rose by 5 to 3. Continuing to dominate the headlines, even as earnings season begins in earnest, was the fighting in the Middle East, the impetus for last week's U.S. market declines and record oil prices. News from Israel and Lebanon battered stocks, sending the Dow down 3.5% and the Nasdaq down 4.3%. For the Nasdaq, it was the worst three-day performance since April 2005. "The most important thing to take away from today is that markets are trying to stabilize," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Given all the events in the Middle East, as well as the large number of economic news that will be released, investors remain uncertain as to the near-term market movements. This is reflected in today's trading." To view Gregg Greenberg's video take on today's market,
Reuters quoted a television station in Lebanon reporting that an Israeli fighter jet was shot down during the ongoing military offensive aimed at Hezbollah. That report was denied by Israel, as was a separate story claiming it had launched a ground incursion over the Lebanese boarder. Over the weekend, nine people were killed when a rocket fired by Hezbollah guerillas landed in the Israeli port city of Haifa. "The market is completely preoccupied with the events in the Middle East," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "It would be a gutsy trade to go long in this market environment, but so much negative news has been digested over the past few weeks that the greater volatility probably lies to the upside." Oil, which rose above $77 for the first time on Friday due to the Mideast violence, tumbled on Monday. The August contract fell $1.73 to close at $75.30 a barrel. Gold fell $16.10 to close at $651.90 an ounce. The energy sector was slammed Monday, with the Philadelphia Oil Service Sector Index dropping 4.4% and both the Amex Oil Index and the NYSE Energy Index losing 2.8%. Elsewhere, the Philadelphia Gold & Silver Index tumbled 3.4% following gold's decline. The Nasdaq Biotech Index was nearly 1% lower, and the Philadelphia Semiconductor Sector Index gave up 0.6%. On the corporate side, Citigroup ( C) said second-quarter earnings rose 4% to $5.27 billion, or $1.05 a share, missing estimates by a penny. U.S. consumer lending was the main drag, with revenue falling 5% to $1.3 billion. The bank blamed a drop in mortgage-servicing revenue and reduced profit margins in its banking operations. Citigroup was lower by $1.18, or 2.5%, to $46.40. Harley-Davidson ( HDI) posted a second-quarter profit of $243.4 million, or 91 cents a share, up 2.5% from a year ago. Revenue rose to $1.38 billion from $1.33 billion last year. The Thomson First Call consensus was for EPS of 91 cents. Shares gained 94 cents, or 1.8%, to $52.31.
Industrial products maker Eaton's ( ETN) second-quarter profit reached $253 million, or $1.64 a share, a 21% rise from a year earlier. Excluding charges, earnings for the quarter were $1.68 a share, beating the Thomson First Call average estimate by a nickel. Eaton ended lower by $2.99, or 4.4%, to $65.06. Among ratings moves, Morgan Stanley upgraded Seagate Technology ( STX) to equal-weight from underweight, and UBS raised its rating for Qualcomm ( QCOM) to buy from neutral. Seagate was higher by 47 cents, or 2.1%, to $22.90. Qualcomm climbed 19 cents, or 0.5%, to finish at $36.56. The New York Empire State Index fell to 15.6 in July after jumping to 29.0 the previous month. Elsewhere, the Federal Reserve said industrial production was up 0.8% in June, above estimates of a 0.5% rise. Capacity utilization use rose to 82.4%, a six-year high, from 81.8%. Overseas markets were lower, with London's FTSE 100 down 0.1% to 5701 and Germany's Xetra DAX lower by 0.1% to 5417. In Asia, Japan's Nikkei was closed for a holiday. Hong Kong's Hang Seng lost 0.4% to 16,065. The earnings parade will continue Tuesday, with reports expected from IBM ( IBM), Johnson & Johnson ( JNJ), Merrill Lynch ( MER), Yahoo! ( YHOO) and Coca-Cola ( KO), among others.