U.S. Stocks End Mostly Higher As Crude Oil Slides 3%
NEW YORK (MarketWatch) -- Stocks ended mostly higher Monday, rebounding from a sell-off last week, as a steep drop in crude oil prices and upbeat housing data provided some relief to investors worried that surging oil will further weaken an already fragile economy.
Financial shares still weighed on the market on concerns over capitalization needs at investment firm Lehman Brothers Holdings Inc. And technology shares were kept under pressure ahead of a quarterly update from chipmaker Texas Instruments Inc., a bellwether for the tech industry.
The Dow Jones Industrial Average finished up 70 points at 12,280, after dipping in and out of negative territory during the session, and backing off from a morning high of 12,331.
The bounce remained very timid relative to the Dow industrials' nearly 400-point drop Friday. That slide came after news that the U.S. jobless rate jumped up to 5.5%, just as crude surged nearly $11 to approach $140 a barrel.
"There were plenty of places to place the blame for the jump in prices; however, the reality will be ever-higher pump prices over the summer, cutting a bigger hole in consumer's pocketbooks," said Paul Nolte, director of investments at Hinsdale Associates.
Leading the gains on the Dow, shares of Alcoa Inc. gained 7.5% after Barron's highlighted positive fundamentals for aluminum and the stock.
McDonald's Corp. rose 4.1% after the company reported same-store sales rose 7.7% in May.
The S&P 500 Index turned higher in the final hour of the session, adding 1 point to finish at 1,361.
Financial stocks weighed the most on the broad index. Shares of Lehman Brothers dropped 8.7% after the investment bank said it would raise $6 billion in a stock offering. Lehman also expects to report a sizable second-quarter loss of $2.8 billion, or $5.14 a share.
Losses were also seen on the Nasdaq Composite Index , which fell 15 points, or 0.6%, to finish at 2,459.
Technology shares were pressured ahead of a key second-quarter update from Texas Instruments , which is due to provide its mid-quarter update for the second quarter after the close.
Separately, Apple shares fell 2.2%, after CEO Steve Jobs unveiled a new version of the iPhone wireless handset at the firm's annual developer conference in San Francisco.
Shares of Yahoo rose 0.5% after billionaire investor Carl Icahn fired another salvo in his attempts to take control of the company's board.
Housing reprieve
In a sign that the U.S. housing market may gain some strength in coming months, an index of sales contracts on previously owned U.S. homes rose 6.3% in April from the prior month, the National Association of Realtors reported Monday.
The dollar was higher following the report, rising to 106.29 yen, while the euro dipped to $1.5633.
In the broad market, the energy sector of the S&P 500 was the leading sector, rising 2.5%, with refiners and other purchasers of crude rising on oil's drop. The consumer-discretionary and consumer-staples sectors turned negative, though.
Crude for July delivery fell $4.19, or 3%, to close at $134.35 a barrel, after hitting a record above $139 Friday.
But keeping alive concerns about consumer spending, average retail prices in the United States for a gallon of regular gasoline surpassed $4 on Sunday for the first time. Prices rose to $4.023 on Monday, up from Sunday's level of $4.005 and 30.2% higher than a year ago, according to AAA's Daily Fuel Gauge Report.
Trading volumes were light with 1.35 billion shares trading on the New York Stock Exchange, where declining issues topped decliners by a ratio of 2 to 1. On the Nasdaq stock market, 924 million shares traded, with decliners topping gainers by 19 to 9.
In other news, Lehman Brothers shifted its stance on European stocks Monday to underweight from overweight and increased its exposure to U.S. equities, which it upgrade to overweight from underweight.
The broker said it's also adding to its already overweight position in the Japanese market. Lehman said that the changes were due to the European Central Bank's hawkish stance on rates and the implications of that on stocks for the region, as well as by contrasting the central bank's approach with the stance of the U.S. Federal Reserve.
European markets finished the session mostly flat to begin the week, with oil companies stocks helping to overcome weakness in financials. In Asian trading, Japan's Nikkei 225 Average fell 2.1% overnight to 14,181.3.
By Nick Godt