Stocks Finish Mixed as Apple, Bank Shares Fall

NEW YORK ( TheStreet) -- Major U.S. stock averages were mixed Monday. Apple ( AAPL) shares fell, and bank stocks declined ahead of earnings reports this week.

The Dow Jones Industrial Average rose 19 points, or 0.1%, to 13,507 to boost the blue-chip index's winning streak to four sessions.

Breadth was positive, with winners outpacing losers 17 to 13. The top percentage blue-chip gainers were Hewlett-Packard ( HPQ), Cisco ( CSCO), UnitedHealth ( UNH) and Boeing ( BA).

Hewlett-Packard shares jumped 4.9% after JPMorgan upgraded the stock to "neutral" from "underweight" and raised its price target to $21 from $15.

Financial stocks were some of the biggest decliners in the Dow ahead of their earnings later in the week. Bank of America ( BAC) shares fell 1.3%, and JPMorgan ( JPM) dipped 0.54%.

Also falling were IBM ( IBM) and Intel ( INTC).

The S&P 500 shed 1 point to 1,471. The Nasdaq was off 8 points, or 0.3%, to 3,118.

Sectors in the broader market traded mixed. The biggest sector decliner was technology, followed by services. Sector advancers included transportation, consumer cyclicals and consumer non-cyclicals.

Apple shares plunged 3.6% at final check, after opening down 4% on reports that the tech giant has cut orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation told The Wall Street Journal.

Both Bank of America and UBS said Monday morning that this is "old news" from December and the stock has recovered from its lows.

Kevin Pleines, equity market analyst at Birinyi Associates, said that looking at the 20 instances since 2009 when Apple has opened down more than 2%, "there is no clear trend for the trading day. From the close after the gap down (today's close) the stock has had a tendency to trade higher over the next week and month."

Major bank releases later this week include JPMorgan and Goldman Sachs ( GS) on Wednesday, and Bank of America and Citigroup ( C) on Thursday. Morgan Stanley ( MS) reports on Friday.

JPMorgan Chase's board is expected to dock the 2012 bonuses of CEO Jamie Dimon and another top executive because of the "London Whale" trading debacle, the Journal reported, citing people close to the company.

"What we're really focused on is the banking institutions and what is the quality of their earnings, what is the quality of their revenues," said Keith Bliss, Cuttone director of sales and marketing.

He said two things are "vastly important" when looking at these companies. One is net interest margin. "Right now it's been shrinking for the big banks primarily because of the low interest rate environment and the flat yield curve that we've had for the last two years."

"The other is the loan-to-deposit ratio," Bliss said. Most banks, to make money, want to be at a 100% loan-to-deposit ratio. "Most of them are riding in the 70% category right now, which means they want to lend the money out, but they're just not finding good quality borrowers," he explained.

Bliss said that it's expected that the insurers will be weak as they're going to have to pay out their claims on Hurricane Sandy, which are substantial.

In midday Monday, President Barack Obama said during a media conference that if the debt ceiling is not raised, the U.S. may be tipped into recession. On the other hand, if "politics don't get in the way," Washington will have a good year.

"Congress must authorize me to pay for those items of spending they have already authorized," he said.

A number of Federal Reserve officials spoke Monday ahead of Fed Chairman Ben Bernanke's scheduled 4:30 p.m. EST speech on monetary policy and the U.S. economy at the University of Michigan with Ford School Dean Susan Collins.

"Fed Chairman Bernanke is speaking on the longer term challenges for the U.S. economy," said Paul Donovan, global economist at UBS. "There are quite a few of these. The fiscal position remains very much in focus, and this is likely to be where markets keep their attention."

Atlanta Fed President Dennis Lockhart said during a talk on the economic outlook at the Rotary Club of Atlanta that the Fed's open-ended bond purchase isn't "without bound," and the program is not "QE Infinity." He stressed that in determining how long the purchase programs should continue, the FOMC has indicated that it intends to assess labor market developments on the one hand and review the program's efficacy and costs on the other.

"The accumulating purchases of bonds could complicate the FOMC's efforts to withdraw monetary stimulus when the appropriate time comes. We have tested tools for exit, but it will be uncharted territory," said Lockhart.

Before Lockhart's speech, San Francisco Fed President John Williams said during his keynote speech on the economic outlook to an industry strategy symposium in California that he anticipated that the continued purchases of mortgage-backed securities and longer-term Treasury securities would be needed well into the second half of 2013.

No major U.S. economic releases were expected for Monday.

European markets were giving up earlier gains as investors waited for the momentum to pick up for earnings season. The FTSE 100 in London closed off 0.22%, while the DAX in Germany finished up 0.18%.

Hong Kong's Hang Seng closed up 0.64% after the China Securities Regulatory Commission Chairman Guo Shuqing said the country could significantly raise the quota for foreign investment in Chinese equity markets.

Japanese markets were closed for a public holiday.

Gold for February delivery Monday added $8.80 to settle at $1,669.40 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil futures increased 58 cents to close at $94.14 a barrel.

The benchmark 10-year Treasury was up 5/32 to dilute the yield to 1.852%. The dollar was down 0.06%, according to the U.S. dollar index.

Harry Winston Diamond ( HWD) said it is selling its luxury-brand diamond jewelry and timepiece division, Harry Winston Inc. to Swatch Group for $750 million plus an assumption of up $250 million of pro forma net debt. Shares surged 4.3%.

hhgregg ( HGG) shares were off by 5.7% after the specialty retailer of home appliances and electronics reported lower-than-forecast fiscal third-quarter results amid a predicted 10% same-store sales decline.

United Parcel Service ( UPS) has withdrawn its €5.2 billion ($7 billion) takeover of TNT Express after it learned that European regulators would block the deal.

UPS shares rose 1.7%.

Transocean ( RIG) disclosed that activist investor Carl Icahn acquired a 1.56% stake in the offshore rig contractor and is looking to boost that holding, Reuters reported.

Shares lost 0.3%.

Facebook ( FB) shares rose 2.4% as the stock was upgraded to buy from hold by analysts at Deutsche Bank, who were impressed by the revenue boost the company is getting from mobile newsfeed ads.

Flowers Foods ( FLO) shares surged 9.6% after the company said it has signed agreements to buy certain brands, including Wonder Bread and Nature's Pride, from bankrupt Hostess Brands for about $360 million.

Lear ( LEA) shares climbed 0.23% as the supplier of automotive seating and electrical distribution systems launched financing actions to increase liquidity and announced an increase in its existing share repurchase program authorization.

-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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