U.S. Stocks Fall Slightly After Recovery Attempt
NEW YORK (MarketWatch) - U.S. stocks trended lower in indecisive action Monday, with the market struggling to hold gains after last week's brutal sell-off, and getting some relief from deal news and solid results from HSBC Holdings PLC.
The Dow Jones Industrial Average was down 2.6 points at 13,262.5, with 16 of its 30 stocks losing ground, with General Motors Corp. leading the decline.
GM fell 1.8%, with the largest U.S. automaker on Tuesday slated to report second-quarter earnings.
Verizon Communications also weighed. The wireless communications provider reported an line 6% rise in profit, along with its plan to buy Rural Cellular Corp. for $2.67 billion.
Verizon stock, which had edged higher before the opening bell, fell 1.5%, while technology giant IBM Corp. fell 1.2%.
Boeing Co. fronted the Dow's gains, its stock up 1.5%, followed by Home Depot Inc. , which gained 1.7%.
Manic Monday
The S&P 500 edged 0.15 points lower to 1,458.7, while the Nasdaq Composite fell 2.7 points to 2,559.
On the NYSE, declining issues topped those advancing by a 9-7 ratio, while decliners beat advancers 18-11 on the Nasdaq.
More than 968 million shares were traded on the NYSE, while 1.1 billion were exchanged on the Nasdaq.
The week after
Last week private-equity and credit-market jitters forced the major averages to suffer their worst week since March 2003. The Dow Jones industrials dropped 4.2%, the S&P 500 fell 5% and the Nasdaq Composite lost 4.6%.
Investors Monday are looking for signs of stabilization or further deterioration in the credit markets. At the same time, many stocks fell to enticingly cheap prices during last week's rout.
There was a spot of good news early Monday for the embattled credit markets, which have been struggling with both the subprime lending crisis and the new concerns about private-equity debt sales.
HSBC in February was one of the first banks to warn about the impact from subprime crisis. But on Monday Europe's largest reported a 25% profit rise, and said bad debts in the U.S. were about the same as last year as it stopped underwriting subprime mortgages.
However, German lender IKB fell 18% after warning about its subprime lending exposure.
In addition, RBC Capital Markets downgraded American Home Mortgage Corp. to a sector perform rating, citing liquidity concerns linked to the debt markets.
American Home Mortgage, which halted its dividend after being hit by margin calls, lost nearly 40% before the open, with trading of its shares delayed on the NYSE.
Deal news
Takeover candidate ABN Amro withdrew its recommendation of a takeover bid from Barclays plc . The bank cited the current value of the U.K. lender's offer as compared to a rival offer from the Royal Bank of Scotland, Banco Santander and Fortis. ABN also reported a 7% profit decline.
The stock was up 1.7%.
Liberty Global Inc. said it's considering entering the auction for U.K. cable operator Virgin Media Inc. .
The Bancroft family, the controlling shareholder group of Dow Jones & Co. Inc. has until 5.15 p.m. Monday to present its share votes on News Corp.'s offer to buy the company for $5 billion, according to the Wall Street Journal online.
The site said voting results are too close to call. Dow Jones' stock fell 1.2%, while News Corp.'s stock slid 0.4%.
Earnings news
Humana Inc. said its results more than doubled. It reported that its second-quarter net income climbed to $217 million, or $1.28 a share from $89.5 million, or 53 cents a share, with revenue up 19% to $6.43 billion. Analysts polled by Thomson Financial expected earnings of $1.34 a share.
Hair care products maker Alberto-Culver had earnings and revenue that beat expectations.
Other markets
Treasury prices fell, pushing yields above recent lows, as a rise in te stock market drew capital out of the fixed-income market.
The benchmark 10-year Treasury note fell 5/32 to 97-26/32 with a yield of 4.781%.
The dollar dropped against other major currencies, coming off a two-week high against the euro as many traders bet the greenback's rebound last Friday was likely overdue.
In early New York trading, the euro stood at $1.3682, compared with $1.3642 late Friday. The dollar was quoted at 118.53 yen, compared with 118.79 yen.
September crude fell 62 cents to $76.40 a barrel, while gold futures climbed 60 cents to $660.70 an ounce.
By Kate Gibson