Updated with stock, commodity and Treasury prices.Consumer staples stocks and an upgraded American Express ( AXP) helped to pull two of three major indices into the green Monday after a drop in oil and economic worries discouraged investors early on. The Dow Jones Industrial Average was higher by 44.13 points, or 0.5%, at 8324.87, while the S&P 500 gained 2.3 points, or 0.3%, to 898.72. The Nasdaq Composite declined 9.12 points, or 0.5%, to 1787.40. American Express increased 5.6% after an upgrade, leading the Dow. It was followed by 1% to 3% gains in DuPont ( DD), Travelers ( TRV), Merck ( MRK), Procter & Gamble ( PG), and Kraft ( KFT). Those gains helped to offset a 6.1% decline in aluminum maker Alcoa and a 3.9% loss in Bank of America ( BAC) shares. Stocks overseas retreated early and oil tumbled $2.68 to settle at $64.05 a barrel amid concern for the global economic recovery. Disappointing economic data from last week on consumer sentiment and unemployment continued to jar the U.S. markets early Monday as well, although buyers began to step in on the dip by midday. "The expectations are and have been that things are getting less worse, and unfortunately the jobs report didn't have anything to support that things are getting less worse -- we're still bad and still struggling overall from employment to income," says Paul Nolte, director of investments at Hinsdale Associates. "After three days of thinking about it, I think investors decided -- discretion being the better part of valor -- maybe taking money off the table after Thursday's decline," says Nolte. "As long as incomes aren't rising that quickly, it's going to be hard for the consumer to begin spending to support the overall economy." (Click to listen to my entire conversation with Nolte.)
The market had in many respects gotten ahead of its headlights in terms of projecting the timing and strength of the recovery, says Brian Bethune, chief U.S. financial economist at IHS Global Insight. "The evidence that we're seeing is really that a lot of this fiscal stimulus that's going out there is being saved," says Bethune. "On the one hand you're trying to tell people we'll give you an incentive to buy a house or a car, but there's a lot of uncertainty about the status of the job market and where things ultimately are going in terms of policy." The first economic data of the week came from the Institute for Supply Management, and was actually better than expected. Its services index increased to 47% in June from 44% the month prior, indicating contraction in the non-manufacturing sector for the ninth consecutive month, but at a slower rate. Wall Street will turn its attention this week to second-quarter earnings, looking for clues to the pace of economic recovery. Alcoa ( AA) will kick off the start to earnings season for Dow Jones Industrial Average stocks with its report after the market close on Wednesday. Other earnings this week include Ruby Tuesday ( RT), Family Dollar ( FDO), Pepsi Bottling ( PBG), 3Com ( COMS) and Infosys INFY ( INFY). In other headlines, a federal bankruptcy judge approved General Motors' ( GMGMQ) plan to sell its best assets to a new company, effectively clearing the way for the U.S. automaker to emerge from bankruptcy.
Also, food and beverage packager Bemis ( BMS) plans to acquire the Food Americas operations of Alcan Packaging, a unit of Rio Tinto ( RTP), for $1.2 billion. Bemis gained 5%, while Rio Tinto lost 6.5%.
In banking news, Wells Fargo ( WFC) announced Monday that it plans to expand its securities business that it inherited when it acquired Wachovia. Meanwhile, Swiss bank UBS ( UBS) could shake up its top management at its U.S. brokerage business after opting not to sell the operation, the Financial Times reported. Wells Fargo and UBS were up 0.1%, and 0.6%, respectively. In Europe, London's FTSE 100 and the DAX in Frankfurt were falling 1% and 1.2%, respectively. In Asia, the Nikkei in Japan and the Hang Seng in Hong Kong closed lower by 1.4% and 1.2%, respectively. Longer-dated Treasuries were recently mixed. The 10-year was flat to yield 3.5%, while the 30-year fell 12/32, yielding 4.34%. The dollar was recently stronger against the yen, and slightly weaker vs. the pound and euro, while gold fell $6.70 to $924.30 an ounce.