U.S. stocks ended a choppy session little changed on Monday after Standard & Poor’s Ratings Services revised its U.S. credit-rating outlook to stable from negative and consumer shares lost ground.
After swinging between gains and losses during the session, the Dow Jones Industrial Average finished down 9.53 points, or 0.06%, to 15,238.59, with 14 of its 30 components in positive terrain.
Walt Disney Co. fell 1.6%, the biggest decliner in the Dow.
The blue-chip index had rallied more than 200 points on Friday.
Among Dow gainers, McDonald’s Corp. added 1.3% after it posted stronger-than-expected same-store sales for May. The fast-food giant is benefiting from its expanded menu.
The S&P 500 dipped 0.57 point to end at 1,642.81, with consumer discretionary the biggest laggard and telecommunications the biggest gainer among its 10 major industry groups.
The Nasdaq Composite gained 4.55 points, or 0.1%, to finish at 3,473.77.
Before the market open Monday, Standard & Poor’s revised its credit-rating outlook for the U.S. to stable from negative, indicating the likelihood of a near-term downgrade is less than one in three. S&P also affirmed its AA+/A-1+ sovereign-credit ratings for the U.S.
In Montreal, St. Louis Federal Reserve President James Bullard said that improved labor-market conditions suggest the Fed could slow the pace of bond purchases, but surprisingly low inflation may mean the Fed can maintain its aggressive program over a longer time frame.
Investors are closely monitoring data and Fed speeches for any clues as to when the central bank may start scaling back its $85 billion in monthly bond purchases.
Last week, U.S. stocks staged an upside reversal to close higher for the week, helped by the government’s May employment report. Stocks had suffered weekly losses for two straight weeks, but then last week the S&P 500 found buyers at its 50-day moving average for the third time this year.
Bruce Bittles, chief investment strategist at R.W. Baird, suggested on Monday that the market is digesting its advance at the end of last week. He told MarketWatch that he expects the S&P 500 to stay in a trading range between about 1,600 and 1,660 until the Fed’s June 18-19 meeting.
The central bank won’t make a policy change at that meeting, according to Bittles, but the uncertainty around the meeting will be enough to keep stocks range-bound. Bittles noted the May jobs report had some less-than-impressive aspects, such as a loss in manufacturing jobs and a downward revision to April’s numbers.
“We have not even approached escape velocity. The Fed is going to keep on keeping on, as far as I’m concerned,” he said. Bittles said it’s hard to figure out the effect of Monday’s S&P outlook news, noting that Treasurys actually rose in 2011 when S&P downgraded its credit rating for the U.S.
Brian Belski, chief investment strategist at BMO Capital Markets, described the recent jobs report as “not too hot, not too cold.” In other words, it hit the sweet spot that many strategists had been looking for.
Belski said in an interview Monday that he remains in the “correction camp” in the near term. He said there needed to be a washout of “some of the recent buyers who have been chasing performance” after missing out on earlier stock gains. But on a longer-term basis, he said he’s “very bullish” on equities, especially U.S. stocks.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said there’s a “void of economic information” at the moment, so the market on Monday was still reacting a little to the positive news from last week.
Luschini said the market is getting “a little Fed-governor-speak fatigue.” The central bank’s officials have been delivering speeches frequently and not providing a clear message, probably deliberately, he said.
Among tech stocks, Apple Inc. slipped 0.7%. At its Worldwide Developers Conference on Monday, the company unveiled its latest mobile-operating system, a new music-streaming service called iTunes Radio and updates to its line of MacBook computers.
Google Inc. rose 1.2% after reports that the Internet-search giant was close to reaching a $1.1 billion deal to buy Israeli map-software provider Waze.
Facebook Inc. rallied 4.5% after Stifel upgraded the social network’s shares to buy.
Monsanto Co. was among the top gainers in the S&P 500. It rose 4.5% after an upgrade from Macquarie analysts.
For-profit educator Apollo Group was another big winner in the S&P 500, advancing 4.4%. It might be getting a boost from talk that the for-profit-schools sector is fertile ground for bargain hunting.
In the home-building sector, J.P. Morgan downgraded Lennar Corp. to neutral from overweight, saying that the valuation “appropriately reflects above-average fundamentals.” Lennar shares dropped 3.3%. Among other home builders, D.R. Horton Inc. fell 2.1% and PulteGroup Inc. slipped 2%.
Stocks in Tokyo rallied Monday after a three-session loss, with the Nikkei Stock Average finishing 4.9% higher at 13,514.20, backing further away from bear territory, as the yen weakened. Japanese equities benefited from an upward revision to Japan’s first-quarter GDP figure to 4.1% growth.
Source : Marketwatch