Stocks gained moderate strength in the final hour of trading Monday, although largely remained within a narrow range, amid another quiet trading session with the market at or near highs for the year.
The Dow Jones Industrial Average rose more than 15 points after starting the second quarter solidly, closing higher on Friday amid optimism over a recovery in the labor market after data showed a drop in unemployment.
Among Dow components, Wal-Mart, General Electric and Johnson & Johnson gained, while Intel and Hewlett-Packard slipped.
The S&P 500 and the tech-heavy Nasdaq traded flat to lower. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 17.
Among key S&P sectors,technology and financials fell, while materials and health care rose.
Trading was quiet ahead of a week short on economic data or significant earnings reports, with only 512 million shares changing hands on the New York Stock Exchange floor in the final hour of trading.
Investors also seemed reluctant to push stocks past current resistance levels. The Dow traded near its previous 2011 closing high of 12,291.25, while the S&P had trouble breaking beyond 1,333, which was double its intraday low during the financial crisis, and "still struggles to get to the previous high at 1,344," Elliot Spar, option/market strategist at Stifel Nicolaus, wrote in a note to clients. Spar said he would be "cautious" on the market is the market moves lower than the 50-day moving average of 1,310.
A slump in semiconductor stocks provided one reason for the lackluster performance Monday, with more than 60 percent of the stocks in the sector lower. OmniVision Technologies , specifically, fell nearly 7 percent after news Sony may be supplying semiconductor imaging components to Apple for the iPhone. OmniVision had supplied those components.
Also, the iShares PHLX SOX Semiconductor Sector Index Fund Traded down more than 1 percent.
Unrest in the Middle East and North Africa continued to worry investors. Oil pricesrose with U.S. light crude settling up 53 cents at $108.47 a barrel, its highest close since September 2008, reflecting concerns over supply. London Brent crude closed above $120 a barrel. Meanwhile, gold settled near $1,432 an ounceand silver rose to a 31-year high.
In company news, Nortel said it was selling all of its patents and patent applicationsfor a $900 million to Google as part of a "stalking horse" asset-sale agreement. The sale follows a multi-round bidding process.
Among other tech firms, Nvidia slipped after UBS cut its price target on the graphic chips maker to $20 from $22. Apple also traded lower even after Canaccord Genuity raised its price target on the iPad maker to $480 from $460.
And other semiconductor firms were under pressure including AMD and Marvell after Nomura maintained a "neutral" view on the sector, citing weakened demand, peak gross margins and higher capital spending.
General Electric gained after news CEO Jeffrey Immelt defended the nuclear industry's safety record on a trip to Tokyo. GE is a minority shareholder in NBC Universal, the parent company of CNBC.com.
And among other Dow components, McDonald's, meanwhile, traded flat after news the fast-food chain planned to hire 50,000 employeeson April 19 as its business grows.
McCormick & Schmick skyrocketed after Tilman J. Fertitta said he intends to begin an all-cash offer to buy the seafood restaurant company through his affiliate LSRI Holdings, a subsidiary of Landry's Restaurants.
Shares of Southwest Airlines fell after news the airliner canceled 70 flights on Monday after a Boeing 737 was forced to make an emergency landing Fridaybecause of a hole in its fuselage, and that cracks were found in the fuselages of 3 other airlines after 33 were inspected. In addition, UBS cut its rating on the airline company to "neutral" from "buy." Boeing shares also fell on the news.
And General Dynamics
Ford Motor shares climbed more than 3 percent to lead the S&P gainers after Credit Suisse upgraded the automaker to "neutral" from "underperform." (Read More: Ford Topping Sales, How Will GM Respond?)
In M&A news, Pfizer rose slightly after news Kohlberg, Kravis & Robertsplans to buy the drugmaker's Capsugel unitfor $2.38 billion.
And Vivus jumped after the pharmaceutical firm reported a two-year study showed Qnexa, its weight loss drug, also reduces high blood pressure.
Molycorp soared after news the rare-earth producer bought a majority stake in AS Silmet, one of two rare-earth processing companies in Europe. "In the short-term, this will greatly increase our ability to supply our products into the increasingly tight global rare earth market and provide a convenient base from which to supply European customers," said Mark Smith, president and CEO, in a statement.
Deutsche Boerse is waiting to hear from NYSE Euronext's board and the credit rating agencies before it will make a counter offerto Nasdaq and InterContinentalExchange's offer for the stock exchange, sources told Reuters.
Analysts were mixed on the companies—Jefferies cut its rating on Nasdaq to "hold" from "buy," while Raymond James raised its price target to $33.50 from $28.50. Meanwhile, Wells Fargo cut its rating on NYSE Euronext to "market perform" from "outperform" while Susquehanna its price target on the firm to $40 from $36.
BP shares were flat after The Sunday Times in Britain said the oil group struck a deal with U.S. regulators which allows it to resume drilling in 10 existing wells in the Gulf of Mexico.
The U.S. Bureau of Ocean Energy Management refuted the report, saying there was no such deal, Reuters said.
Stocks could start to move later this week if the European Central Bank raises interest rates on Thursday to stem inflation, as investors consider the implications for U.S. rate policy, according to Brian Battle, vice president of trading at the Performance Trust Capital Partners, who noted voting members of the Fed indicated rates could, in fact, rise later this year.
Whether or not the Federal government shuts down Friday amid a budget impasse could also move the markets, Battle said.
In the meantime, stocks continued to grind higher.
"We’ve had oil at $107 a barrel, trouble in the Middle East, a nuclear disaster in Japan, and the stock market trades up 50 points everyday," Battle said.
Investors who make bets the market will go down, also known as "shorts," have been "squeezed out of the market the last six months," he added. "You can’t fight it, it keeps grinding higher."
Comments by a handful of Federal Reserve Presidents will be closely watched throughout the week ahead of Thursday's ECB’s rate-setting meeting and the U.S. Federal Open Market Committee minutes on Tuesday. The Bank of Japan was also scheduled to hold a meeting on Wednesday, and the Bank of England will make an announcement on interest rates Thursday.
Fed chairman Ben Bernanke is scheduled to speak at the Atlanta Fed's financial markets conference at 7 p.m. ET Monday.
European stocks hit a three-week closing high after several merger announcements.
On Tap This Week:
MONDAY: Bernanke speaks
TUESDAY: ISM non-manufacturing index, FOMC Minutes; Lockhart speaks, Kocherlakota speaks, Plosser speaks; earnings from KB Home before-the-bell.
WEDNESDAY: Weekly mortgage applications oil inventories, Treasury STRIPS; Earnings from Monsanto before-the-bell and Bed Bath & Beyond after-the-bell.
THURSDAY: Monthly chain-store sales, Bank of England Announcement, European Central Bank announcement, jobless claims, consumer credit, money supply; Lacker speaks; earnings from Constellation Brands before-the-bell and Rite Aid after-the-bell.
FRIDAY: Wholesale trade.
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