U.S. Stocks Close Volatile Session Little Changed
NEW YORK (MarketWatch) -- U.S. stocks ended Monday little changed after a volatile day marked by wariness ahead of next week's policy-setting meeting of the Federal Reserve.
"It suggests a relative lack of conviction either way. Until we get more visibility in how things will play out in the credit markets this trend will continue," said Mike Malone, trading analyst at Cowen & Co.
"We have to get through a couple of obvious landmarks here -- there is caution ahead of Sept. 11, with lingering concerns about some attempt somewhere on the anniversary, and then we're only a week away from the FOMC [Federal Open Market Committee] meeting," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
The Dow Jones Industrial Average closed 14.5 points higher at 13,127.8, with 16 of its 30 components trading higher, led by McDonald's Corp. , up 1.9%.
The technology sector struggled to hold early gains, with Dow component Intel Corp. ending off 0.7% after the chipmaker lifted its third-quarter revenue guidance. .
The S&P 500 fell 1.85 points to close at 1,451.70, while the Nasdaq Composite shed 6.59 points at 2,559.11.
Trading volume hit 1.3 billion at the New York Stock Exchange, with decliners beating advancers 5 to 3. At the Nasdaq, 1.7 billion were exchanged, with decliners ahead of advancing stocks nearly 2 to 1.
As stocks were mostly lower, bonds rallied, with the benchmark 10-year note up 16/32 at 103 14/32 to yield at 4.321%. Yields on the extremely short end of the curve also continued to drop, indicating investors are wary about credit conditions and concerned about meeting short-term funding demands. .
Fed factors
In the first of four Fed speeches scheduled Monday, Atlanta Fed President Dennis Lockhart said the 4,000 jobs lost in August should be viewed in the context of "recently positive reports in retail sales."
In San Francisco, that city's Fed President Janet Yellen said market turmoil created by problems in subprime mortgages has heightened risks to the overall economy. .
Likely to draw even more interest is Tuesday's scheduled speech in Berlin by Fed Chairman Ben Bernanke. "If they are going to do something, they are going to have to start indicating it to the market," Pado said.
Stocks dropped sharply Friday after unexpected news that payrolls contracted in August, the first such decline in nearly four years, fueled worries of a recession.
The disappointing jobs count also cemented expectations for a Federal Reserve rate cut next week, but the head of the Philadelphia Fed cast doubt on the scenario in a weekend speech.
"Disruptions in financial markets can be addressed using the tools available to the Fed without necessarily having to make a shift in the overall direction of monetary policy," Charles Plosser said in a speech Saturday to a community bankers meeting in Hawaii. .
The commercial paper market was expected to draw investor attention, with about $120 billion of such debt due for renewal this week. Also in the spotlight, overnight inter-bank dollar lending rates continued to hover well below the Fed funds rate.
Monday afternoon, the Fed reported an increase in credit-card debt pushed up outstanding U.S. consumer debt in July, at a 3.7% annual rate, or by $7.5 billion. .
Active stocks
Active stocks included Bear Stearns Cos. , which was up 2% after its disclosure that investor Joseph Lewis recently acquired a 6.97% stake in the Wall Street firm.
Dow component Home Depot Inc. fell 2.3% after the home-improvement retailer said it bought back about $10.7 billion in stock under a Dutch auction tender.
Shares of Walt Disney Co. slid nearly 0.1% following the company's statement that it would test some of its toys to ensure they meet safety standards.
Countrywide Financial Corp. fell 5.5% after the nation's largest mortgage lender's announcement late Fridathat it would cut up to 20% of its workforce.
The tech sector also drew investor focus, with Apple Inc. up 3.8% following an early announcement that it sold its millionth iPhone, putting the consumer electronics maker ahead of its own sales forecasts.
Yahoo Inc. will likely hold onto the Web-search-advertising businesses that it had considered outsourcing to Google Inc. or Microsoft Corp. , the Wall Street Journal reported.
Advanced Micro Devices rolled out its latest microchip, Barcelona, which is designed serve as the heart of corporate server networks. AMD has recently lost market share in the server market to arch-rival Intel. .
Other markets
The dollar remained near 15-year lows against major currencies, with the dollar index -- which measures the greenback against a basket of key currencies -- down 0.1% to 79.84. .
At the New York Mercantile Exchange, gold futures gained $2.50 to close at $712.20 an ounce. .
Crude-oil futures gained, with the contract for October delivery climbing $1.39, or 1.8%, to $78.07. .
The FTSE 100 closed down 0.9% in London. The Nikkei 225 dropped 2.2% in Tokyo after weak economic data there.
By Kate Gibson