Stocks ended mixed Monday as a dismal jobs report last week and expectations for a gloomy earnings season nagged at the market.
But the Dow Jones Industrial Average pulled off a gain amid some bargain hunting. The blue-chip index gained 44.13, or 0.5 percent, to close at 8,324.87. The S&P 500 added 0.2 percent, while the Nasdaq shed 0.5 percent.
The shift in mood has sent the CBOE Volatility Index, widely considered the best gauge of fear in the market, back up. The VIX ended just shy of 30 at around 29.
And investors have shifted back into defensive stocks after a couple of months in cyclicals like tech stocks.
Stocks had gotten a brief reprieve from their negative morning after a report showed improvement in the services sector, which accounts for 80 percent of the economy.
The ISM reported its gauge of the service sector improved to 47in June from 44 in May, the best reading in nine months. The index shows the sector is still in contraction mode, though it's moving ever closer to the 50 mark, which indicates expansion in the industry.
But the jobs report proved more memorable for investors — even after the three-day holiday weekend in the U.S.
Employers slashed 467,000 jobsfrom nonfarm payrolls in June and the unemployment rate ticked up one-tenth of a percent to 9.5 percent. Economists had expected a much smaller job loss of 365,000 but a slightly higher unemployment rate of 9.6 percent.
"The jobs report was weaker than expected and it throws a little cold water on the economic-rebound story," said Alan Gayle, senior investment strategest at RidgeWorth Capital Management. "I think the market is growing a little impatient with less-bad reports — The market was hoping for less-bad and it got worse than bad."
Comments from U.S. Vice President Joe Biden over the weekend fueled investors concerns: Biden said the Obama administration "misread" the depth of the economic troubles it inherited.
And, as the green-shoots talk wilts, investors are also bracing for gloomy earnings.
Earnings season unofficially kicks off this week with a report from Dow component Alcoa after the bell Wednesday. Economists expect a third straight lossfrom the aluminum giant.
Alcoa was the biggest decliner on the Dow Monday, falling 6.1 percent, followed by Bank of America, which lost 3.9 percent and Intel , which shed 1.1 percent.
Bank of America eclipsed UBS as the world's top wealth manager, according to a survey by specialist consultancy Scorpio Partnership, but the survey indicated another tough year for the industry.
Bank of America also approved about $713 million in dividend payments to the government on the $15 billion in Troubled Asset Relief Program funds the bank received.
ExxonMobil and Chevron also dragged on the Dow as oil prices plunged Monday. The price of US light, sweet crude dropped nearly $3 to settle at $64.05 a barrelas concerns mounted over the strength of consumers.
On the flip side of the Dow, American Express was the biggest percentage gainer, climbing 5.6 percent, after Stifel Nicolaus raised its rating on the stock to "hold," saying it was the least exposed to new rules for the credit-card sector.
Shares of General Motors skidded 14 percent. A bankruptcy judge approved the sale of GM's assetsto the "new GM," backed by the government, clearing the path for the automaker to get out of bankruptcy protection quickly.
Techs declined as investors rotated out of cyclicals and into defensive stocks. Both Apple and Microsoft lost about 1 percent.
Defensive stocks — including drug makers such as Merck and consumer staples such as Procter & Gamble and Kraft Foods — advanced.
Volume was below average, with 1.14 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 3 to 2.
— Reuters contributed to this article.This Week:
TUESDAY: No major market-moving events expected
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; consumer credit; Earnings from Family Dollar, Alcoa
THURSDAY: Chain-store sales; weekly jobless claims; wholesale trade; Fed's Duke speaks; Earnings from 3Com
FRIDAY: Import/export prices; international trade; consumer sentiment
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