By Donna Kardos Yesalavich
U.S. stocks wobbled Monday, as declining crude-oil prices
dragged down energy stocks and technology stocks lagged following
reports that Google may close its Chinese-language site.
The Dow Jones Industrial Average (DJI) was down 7 points, or
0.1%, to 10617, in recent trading. Caterpillar Inc. (CAT) was the
measure's worst performer, down 2.1%.
Energy components Exxon Mobil Corp. (XOM) and Chevron Corp.
(CVX) were both weak as crude-oil futures fell below $80 per
barrel. Exxon fell 0.8%, while Chevron slipped 0.6%.
Offsetting some of the declines, Wal-Mart Stores Inc. (WMT)
shares gained 2.4% after Citigroup upgraded the retail giant to buy
from hold, predicting more aggressive pricing.
The Nasdaq Composite (RIXF) dropped 0.3%, weighed down by a 2.6%
drop in the shares of Google, Inc. The company appears increasingly
likely to shutter its Chinese-language search engine, a step that
would remove one of the last major foreign players from the world's
most populous and fastest-growing Internet market.
American depository shares of Chinese Internet company Baidu
(BIDU) jumped 7%, as it stands to become a monopoly if Google exits
China.
The Standard & Poor's 500 (SPX) slipped 0.2%, with its
energy and technology sectors leading the drop. Consumer staples
and utilities posted modest gains.
In the first major acquisition in retail circles in years,
apparel giant Phillips-Van Heusen Corp. (PVH) agreed to acquire
privately-held clothing company Tommy Hilfiger for EUR 2.2 billion
($3 billion), largely in cash. Phillips-Van Heusen shares rose
10%.
Jeffrey Phillips, chief investment officer at Rehmann, said
while the recent pick-up in mergers and acquisitions is a good
long-term sign of improving business stability, the takeover poses
more immediate concerns on the employment front.
"If you see a consolidation there, you'll see some efficiencies,
which means more unemployment," he said. The market is seeing "more
of that activity, which is good for profitability, but not a good
indicator of economic recovery, at least in the short term."
Moody's Investors Service said the risks are growing to the four
largest triple-A-rated countries: Germany, France, the U.K. and the
U.S.
In addition, Chinese Premier Wen Jiabao warned of a double-dip
recession given financial system risks and continued high
unemployment in some countries.
Many investors have already priced in to the market those
concerns, Phillips said.
Still, investors on Monday were drawn to the safety of the
dollar. The U.S. Dollar Index (DXY), which tracks the greenback
against a basket of six currencies, rose 0.4%. Meanwhile, Treasurys
edged lower, with the 10-year note down 7/32 to yield 3.727%, while
gold futures edged up.
Economic wrap
Monday's U.S. economic reports delivered mixed messages. The
Federal Reserve Bank of New York's Empire Manufacturing Survey
showed a decrease in its business conditions index to 22.86 this
month from 24.91 in February. But the report said conditions
"continued to improve at a steady pace in March," including a rise
in new orders and improvement in labor markets.
U.S. industries reduced manufacturing output in February because
of severe weather, while overall production totals inched ahead
slightly. Industrial production last month increased by 0.1%, the
Federal Reserve said, in line with economists' expectations.
Still, manufacturing production in February decreased 0.2% from
the previous month's 0.9% increase, the report said. Car and parts
output showed a steep dip of 4.4%. Excluding autos, production in
all other industry remained stagnant.
Among stocks in focus, Amylin Pharmaceuticals (AMLN) shares
jumped 8.7% after the Food and Drug Administration said it didn't
want more clinical data on a diabetes drug it is developing with
Eli Lilly (LLY) and Alkermes (ALKS). Lilly shares were up 0.1%
while Alkermes climbed 10%.
Boston Scientific (BSX) dropped 13% on a report it's stopped
selling a form of defibrillator.