Stocks Mostly Up Amid Bargain-hunting; Nasdaq Stumbles
NEW YORK (MarketWatch) -- Stocks were mostly higher Monday as investors sought bargains in the wake of last week's sell-off, which coincided with the dollar's decline and ongoing worries about the credit crunch and its impact on the U.S. economy.
"The market has gotten remarkably affordable. Having finished earnings season and from the guidance we got, we're still trading at an attractive valuation," said Art Hogan, chief market strategist at Jefferies & Co.
Hogan cited price-earnings ratios that have the Dow and S&P currently trading at less than 14 times next year's estimates, and the Nasdaq trading at 20 times next year's projections.
After dropping at the start, the Dow Jones Industrial Average reversed course, recently rising 60.7 points to 13,103.5, with 21 of its 30 components trading higher.
Citigroup Inc. led the Dow's gains, as well as a recovery among other financial stocks, which drew support from a New York Times report of an agreement reached Friday among the nation's three largest banks on the structure of a $75 billion fund to support distressed securities.
Stocks of all three banks advanced, with Citigroup up 4.7%, JP Morgan Chase ahead 2.6%, and Bank of America Corp. up 1.1%.
The S&P 500 gained 4.54 points to 1,458.24, while the Nasdaq Composite fell 3.19 points to 2,624.75.
"There is some stabilization in the dollar; a lot of the damage from the last couple of days was focused on that weakness in the dollar," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
After falling to record lows last week, the greenback on Monday gained on most of its major foreign-exchange counterparts. .
Trading volume could prove light due to Veterans Day, a holiday that shuttered the U.S. bond market.
New York Stock Exchange volume came to 716 million, with declining stocks just ahead of those advancing. On the Nasdaq, nearly 1.2 billion shares traded hands, with advancing stocks ahead of those declining by 4 to 3.
"Today there is no economic data, so key inputs would be things like oil being down significantly, which should be good news," said Hogan.
Gold, oil slide
In commodities trading on the New York Mercantile Exchange, gold futures fell as the rebound in the U.S. dollar gave traders a reason to lock in profits, with the front month contract recently falling $27.20 to $807.50 an ounce.
Crude-oil futures fell sharply, declining $1.61 to $94.71 a barrel. .
"Also overdone has been the sell-off, which away from financials and those publicly exchanged companies that have exposure to public real estate, would seem to be throwing the baby out with the bath water," said Hogan.
The financial sector on Monday traded mixed. .
Shares of E-Trade Financial Corp. lost more than half their value after the online broker backed off an earning forecast made less than a month ago.
E-Trade also said it was the target of an informal inquiry launched by the Securities and Exchange Commission regarding its loan and security portfolios, prompting at least one downgrade on its stock. .
Investors' focus on the financial sector also included results from Blackstone Group LP , the private-equity powerhouse that reported a third-quarter loss of $113.2 million from a year-ago profit of $372.5 million.
HSBC Holdings PLC is expected to write down more than $1 billion on its portfolio of high-rise subprime U.S. mortgages, according to a Times of London report. The bank is scheduled to release third-quarter results for its U.S. unit on Wednesday, the newspaper reported.
And in a regulatory filing, troubled mortgage lender Countrywide Financial said if its credit ratings fall below investment grade, its access to the public corporate-debt markets "could be severely limited."
On the technology front, International Business Machines Corp. said it would acquire business software maker ognos Inc. for $5 billion in cash in a deal expected to close in the first quarter of 2008.
Overseas action
Adding to market jitters early on was a large industrial fire in London that caused stock futures to dip briefly before the start of U.S. trading. .
In Europe, shares closed higher after a choppy trading session as investors turned away from the commodity sector. .
Elsewhere, Asian stocks fell sharply. .
By Kate Gibson