Stocks End Mixed as Technology Lifts Nasdaq
Stocks ended mixed after trading in a narrow range most of the session amid light volume Monday, as investors considered Federal Reserve Chairman Ben Bernanke's comments about additional Fed stimulus and regrouped after strong gains in the market last week.
The Dow Jones Industrial Average fell 19.90 points, or 0.2 percent, to close at 11,362.19, after bobbing in and out of positive territory throughout the session.
The sluggish day came after a significant rise in the markets last week even with a weaker-than-expected nonfarm payrolls report on Friday.
Bank of America , Coca-Cola and Microsoft fell, while Cisco and Pfizer rose.
The S&P 500 slipped 1.59 points, or 0.1 percent, to close at 1,223.12, while the tech-heavy Nasdaq rose 3.46 points, or 0.1 percent, to close at 2,594.92. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 18.
Among key S&P 500 sectors, health care, utilities and consumer staples fell, while energy and technology rose.
The dollar rose against a basket of currencies. Gold gained, closing at $1,416 an ounce, amid prospects of continued Fed easing and euro zone worries, as did silver, which traded at a 30-year high.
"Bernanke’s comments highlighted what people already know—that mainly it will take some time for the unemployment rate to come down to more favorable levels," Michael Sheldon, chief market strategist at RDM Financial Group, told CNBC.com.
"The markets are taking a bit of a breather here after a pretty strong gain of 3 percent last week, also following on the heels of a disappointing jobs report on Friday," Sheldon added.
One reason stocks haven't plunged, especially considering Friday's weak jobs report, is a more general sense of optimism among investors. Sheldon noted 49.7 percent of individual investors surveyed by the American Association of Individual Investorswere bullish on stocks last week, up from a reading of 20.7 percent in August.
The next catalyst for the market will likely be a decision on whether to extend the Bush-era tax cuts,as Congress is now considering. Democrats failed to get tax measures passed in the Senate over the weekend for all but families making $250,000 or more.
If the tax rates are extended, that "could provide consumers and businesses a higher level of confidence as we head into the new year," Sheldon said.
The fact "the market bent, but certainly did not break," in the face of consistent stream of negative news — including the European sovereign debt crisis, the likelihood of China raising rates, tensions between the two Koreas, and Friday's jobs report — was one of several signs bullish market conditions persist, Todd Salamone, senior vice president of research at Schaeffer's Investment Research said in note to clients Monday.
Other signs of bullishness included evidence of lower volatility in the future, as measured by a comparison of VIX to the S&P 500's actual volatility, Salamone said. That usually means higher stock prices, he wrote.
Another is the S&P 500 rallied in the week following Black Friday, which historically has led the market to a stronger-than-normal rally for the rest of the year, according to the firm.
Shares of Bank of America slipped after the bank told U.S. regulators it has sold enough assetsto meet the conditions set down in its $45 billion government bailout. BofA was given until the end of the year to generate the funds.
On the tech front, Cisco rose after Oppenheimer raised the networking giant to "outperform" from "perform," saying losses in the company's switching business were already factored into the share price.
Goldman also upgraded Cognizant Technologies to "buy" from "neutral," and raised its price target for the information technology consulting and technology firm to $80 from $71. The brokerage cited a boost in IT spending by financial services companies and growth in offshore sales.
SanDisk slipped after ThinkEquity cut its rating on the flash memory card manufacturer to "hold" from "buy."
AOL could be on the brink of a series of transactions to breakup the Internet content provider, whichcould culminate in a mergerwith Yahoo , Reuters reported, citing sources.
Sprint Nextel shares spiked after David Einhorn, president of Greenlight Capital, a hedge fund, said he had taken a long position in the stock. Einhorn also said Greenlight has a long position in Vodafone .
Groupon, meanwhile, spurned Google's offer to buy the online, local coupon site, preferring to stay independent. Google was reportedly willing to pay up to $6 billion for Groupon, which has 35 million subscribers.
Google, meanwhile, began an online bookstore operation as the search-engine giant looks to expand into e-commerce and compete against Amazon.com , among others. Google Edition, as the bookstore is called, has 3 million titles that consumers can store in a personal online library managed by Google and then read on any device.
A handful of CEO shake-ups affected stocks. Pfizer rose after the world's largest drugmaker, replaced CEO Jeffrey Kindler, who retired unexpectedly, saying he needed to "recharge his batteries."
Elan climbed after the pharmaceutical firm said it appointed Robert Ingram, former CEO of Glaxo Wellcome and former vice chairman pharmaceuticals of GlaxoSmithKline , to the board effective immediately as chairman designate. Elan also benefited from an upgrade by UBS to "buy" from "neutral."
And Kellogg announced CEO David Mackay will retireeffective Jan. 1, and will be replaced by John Bryant, currently chief operating officer.
Shares of Massey Energy jumped after the coal company announced that CEO and chairman Don Blankenship would retire at the end of the year. Current president Baxter Phillips Jr., is expected to replace Blankenship as CEO, and Admiral Bobby Inman, lead independent director on the board, will become chairman. S&P Equity raised the coal company's target price to $57 a share from $49 a share.
Oil prices rose to near $89.38 a barrel.
Shares of Apache and ConocoPhillips
hit a 52-week high.
Kraft was slightly lower after news the food products company was taking its battle with Starbucks to federal court. Kraft wants to stop Starbucks from ending their agreement allowing Kraft to sell Starbucks packaged coffee.
Wal-Mart fell after the U.S. Supreme Court said it would decide whether the largest sex-discrimination class-action lawsuitin U.S. history against the discount retailer's stores can proceed. The case centers on 1.5 million current and former female workers who seek billions of dollars in damages. The court said the charges from million of women were too diverse to proceed as a single class-action lawsuit.
Dollar General sank after the low-cost retailer posted a drop in quarterly same-store sales growth, although its profit results were better-than-expected and the company reported strong full-year guidance. Dollar General's have climbed nearly 20 percent since early November as shoppers turned to discount retailers.
Abercrombie & Fitch rose after Goldman Sachs raised the teen retailer to "conviction buy," from "buy." Shares of the retailer hit a 52-week high earlier in the session. Aeropostale , however, also rose despite Goldman cutting the stock to "sell" from neutral."
In health care, AstraZeneca's new heart medicine Brilique—or Brilinta—won final clearance from regulators in the European Union. The medicine will compete against Plavix, the world's second biggest-selling drug, as early as next year.
Celgene shares dropped after news the pharmaceutical company's myeloma drug, Revlimid, may cause secondary malignancies.
In mergers and acquisitions news, 3M plans to buy Winterthur Technologies AG of Switzerland for about $448 million, to give the diversified technology company a bigger presence in industrial grinding and finishing solutions.
And Bill Ackman, an activist hedge fund manager, reported his firm Pershing Square Capital Management raised his stake in Borders to 37.3 percentfrom 31.5 percent, and said he was prepared to help Bordersacquire rival Barnes & Noble for about $960 million. Shares of both bookstore companies soared.
Volume on the consolidated tape of the New York Stock Exchange was 3.5 billion shares, while 804 million shares changed hands on the NYSE floor. Declines were slightly ahead of advances.
On the economic front, the employment trend index rose in November for the second month in a row, to 99.0, up from a revised 97.6 in October, according to the Conference Board. The index is up 9.3 percent from a year ago, the Conference Board said.
During an interview with CBS television program "60 Minutes” on Sunday, Bernanke said the Fed could engage in another round of bond buying, a program known as quantitative easing,if the jobs picture doesn't improve. But he also said it could be four to five years before the U.S. returns to unemployment of between 5 and 6 percent from the current 9.8 percent.
The signals from Bernanke would usually have boosted sentiment, but that isn't happening, Andrew Sykes, equity trader at Spreadex, told CNBC.com.
"There doesn't seem to be a huge amount of volume; (investors) are probably waiting for leadership when U.S. gets in," Sykes said.
Concerns over the euro zone debt crisis also continued to drag on sentiment. European shares ended higher thanks to strong crude oil prices, which lifted energy stocks. That offset concerns over the outcome of a euro zone meeting which was expected to outline further plans to contain the debt crisis.
Moody's, meanwhile, downgraded Hungary's sovereign debtto near junk level, citing increased concerns with Hungary's fiscal sustainability and high levels of external debt.
On Tap This Week:
TUESDAY: Bank of Canada announcement, IBD/TIPP economic optimism index, three-year Treasury note auction, consumer credit, API weekly report, Ireland budget announcement, 3M investor meeting; before-the-bell earnings from AutoZone, BMO Financial and Vail Resorts; after-the-bell earnings from H&R Block and Novellus.
WEDNESDAY: McDonald's November sales, MBA mortgage applications, quarterly services survey, 10-year Treasury note auction; before-the-bell earnings from United Natural Foods.
THURSDAY: BOE announcement, jobless claims, wholesale inventories, 30-year Treasury bond auction, DuPont investor day; before-the-bell earnings from Costco and Lululemon Athletica; after-the-bell earnings from National Semi.
FRIDAY: International trade, import and export prices, consumer sentiment, and Treasury budget.
More From CNBC.com: