U.S. Stocks Sputter To Mixed Close; Nasdaq Extends Losing Streak

NEW YORK (MarketWatch) -- U.S. stocks wobbled Monday, with the Nasdaq extending losses into a seventh session, as equities trade fluctuated between worries about the economy and buyers swooping in to pick up shares in the wake of Friday's steep price drop.

"The drivers of last week will not be with us this week; we're not going to get the same economic data that speaks to a slowdown in the economy or a pickup in inflation," said Art Hogan, chief market strategist at Jefferies & Co.

Up and down in a 150-point trading range, the Dow Jones Industrial Average finished 27.3 points ahead at 12,827.5.

Of the Dow's 30 components, 21 ended higher, led by Altria Group Inc. , up 3.1%.

Other Dow gainers included McDonald's Corp. , up 1.7%, following a Wall Street Journal report that the fast-food chain would compete with Starbucks Corp. by opening coffee bars offering cappuccinos and lattes.

Shares of Starbucks were up 1.8%.

Blue-chip losses were fronted by Alcoa Inc. , down 5.1% ahead of the aluminum producer's fourth-quarter results, due Wednesday.

The S&P 500 climbed 4.55 points to 1,416.18, while the Nasdaq Composite , which has lost ground for the past six sessions, fell 5.19 points to 2,499.46.

Falling for the past seven consecutive sessions, the Nasdaq has shed 8.3% of its value since Dec. 26.

On the New York Mercantile Exchange, crude-oil futures fell $2.82 to $95.09 a barrel, and gold futures dropped $3.7 to end at $862 an ounce.
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More than 1.7 billion shares traded hands on the New York Stock Exchange, where advancing stocks outpaced those declining 9 to 7. On the Nasdaq, volume neared 2.6 billion, and declining stocks edged just ahead of those advancing.

Bottom feeders

"There are a few people out doing a bit of bargain shopping. It's the same type of dynamics that we've seen even in the holiday-shortened weeks, the market goes down in high volume and rises in low volume," said Paul Nolte, director of investments at Hinsdale Associates.

On Friday, stocks fell steeply, with the technology-laden Nasdaq tallying its deepest drop in nearly a year, after the government reported a jump in the unemployment rate for December to 5%, fueling further speculation the U.S. could be headed for a recession.

"The damage was done on Friday, and the markets are decidedly uncertain as to their next move. I continue to believe that equities will remain on sale while the credit crisis and confidence shortfall works itself out," said Kevin Giddis, managing director in charge of fixed-income trading at Morgan Keegan & Co.

In a speech in New York, Treasury Secretary Henry Paulson said about 45,000 of 1.8 million at-risk subprime borrowers have asked for help to refinance their mortgage.

Still, Paulson maintained the U.S. economy "remains resilient." .

Atlanta Fed President Dennis Lockhart offered a more sober assessment of the economy in a speech Monday, saying negative factors "may be gaining momentum." .

Active issues

Shares of Krispy Kreme Doughnuts Inc. gained 11.3% after the company's chief executive stepped down amid a faltering turnaround effort.

CNet Networks Inc. fell 4.2% after a group of investors moved to wage a proxy battle over the online-content company. .

Shares of Jefferies Group Inc. fell 5.7% after the investment bank forecast an unexpected loss for the fourth quarter.

Overseas, most Asian stock markets fell sharply in echoing Wall Street's steep sell-off Friday. .

In Europe, stocks finished lower for a second consecutive session amid worries of recession. .

By Kate Gibson