Stocks Mixed As Technology-heavy Nasdaq Stumbles
NEW YORK (MarketWatch) -- U.S. stocks on Monday afternoon traded mixed as bargain hunters lifted the Dow, including its embattled financial stocks, while a sell-off in the technology sector continued, leaving the Nasdaq Composite in the red.
"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 and then reversing course to a 100-point gain, the Dow Jones Industrial Average was recently up 28.9 points to 13,071.6, with 18 of its 30 components trading higher.
Citigroup Inc. led the Dow's gains and boosted 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 the top three banks each advanced, with Citigroup up 3.5%, JP Morgan Chase ahead 1.7% and Bank of America Corp. up 2%.
The S&P 500 fell 2.07 points to 1,451.63, while the Nasdaq Composite fell 22.32 points to 2,605.62.
"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 gained on most of its major foreign-exchange counterparts Monday. .
Trading volume could prove light due to Veterans Day, a holiday that shuttered the U.S. bond market.
New York Stock Exchange volume topped 1.2 billion, with declining stocks ahead of those advancing 9 to 7. On the Nasdaq, more than 2.1 billion shares traded hands, with declining stocks pulling just ahead of those advancing.
"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 falling $27.00 to finish the session at $807.70 an ounce.
Crude-oil futures fell sharply, declining $1.70 to close at $94.62 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 bathwater," 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 MachinesCorp. said it would acquire business software maker Cognos 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