Stocks were modestly higher Monday amid thin volume as investors continue to digest news of a weaker economy.
The Dow Jones Industrial Averagewas up slightly, after being down more than 60 points, with Cisco , Intel and Home Depot leading advancers. Travelers and Johnson & Johnson led decliners.
TheS&P 500and the Nasdaq were higher. The CBOE Volatility Index was down slightly below 26.
Last week was the worst week for the marketsin the past six, with the major indexes falling 3 to 5 percent.
Technology, materials and consumer discretionary stocks are higher, while health care, telecom and energy are lower.
"My perspective is the market’s focus is slowly turning from the great second quarter earnings reports to the emerging reality that the economy is slowing," said Alan Gayle, senior investment strategist for RidgeWorth Investments.
Gayle believes the markets will remain challenging to navigate for sometime, but said his firm believes a transition is underway from a "statistical bounce" to a "low trajectory sustainable recovery."
"What that means is the market is taking a much more conservative look at valuations," Gayle said, adding that situation creates an opportunity. "There will be weakness through the rest of summer and into the all, but because I believe the recovery is sustainable, we will see some pickup in the market as we finish up the fourth quarter."
The National Association of Home Builders index of home builder confidence in the market fell to 13 in August, its lowest level since March 2009, and less than an expected reading of 15. The index was at 14 in July.
“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich., said in a statement. “Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales.”
More information about the state of the housing market will be learned Tuesday when July housing starts are released. Also, the Treasury Department will host a public forum on reforming Fannie Mae and Freddie Mac.
In other economic news, a gauge of manufacturing activity in New York reported a slight increase, Monday after plunging the previous month. Still, the results were below expectations. And Capital One Financial's U.S. credit-card defaults declinedfor the fourth month in a row, a sign that fewer Americans are falling deeper into debt.
China officially took over Japan as the number two economybehind the United States, after Japan reported its economy was valued at about $1.28 trillion in the second quarter, slightly behind China’s $1.33 trillion economy.
In corporate news, Dellannounced plans to buy 3PAR, a data storage company, for $18 per share in cash, or $1.15 billion, an 87 percent premium over 3PAR's price on Friday.
Also in the technology sector, an Apple manager was arrested Friday and indicted in an alleged kickback scheme involving Asian suppliers of accessories for the iPhone and iPod.
In earnings news, Lowe's turned in worse-than-expected earnings and sales, and warned of a bleaker outlook ahead until the housing market turns around. Home Depot will release earnings data Tuesday before the bell.
After the bell earnings today are expected from Urban Outfitters and scientific-instrument maker Agilent.
In other news, a clause in the Dodd-Frank financial reform bill means that many banks can buy back trust preferred securities, equity instruments that pay interest like bonds, before they lose their status as tier-one capital. Trups, as they are known, are an expensive form of capital and banks would like to replace them with cheaper forms.
Hulu, an Internet site for watching television shows and movies is reportedly making plans to go public as early as this fall in a deal valued at about $2 billion.
Bank of America is considering reducing its 35 percent stake in BlackRock, according to The Wall Street Journal.
On Tap This Week:
TUESDAY: Producer Price Index, Housing starts, industrial production; earnings before the bell from Home Depot, Wal-Mart, Abercrombie & Fitch and TJX
WEDNESDAY: MBA mortgage applications, weekly oil inventories; earnings before the bell from Deere and Target
THURSDAY: Jobless claims, leading indicators, Philadelphia Fed survey; earnings after the bell from HP, Dell, Gap and Intuit
FRIDAY: No major events scheduled
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