By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks recovered from early
morning selling bout, but still finished lower on Monday, as
investor confidence was hit by violent unrest in Hong Kong and a
brief spike in the dollar.
Skittishness receded somewhat after better-than-expected
consumer spending data, but investors kept to safe havens such as
Treasurys , shunning riskier assets like stocks.
The S&P 500 (SPX) closed down 5 points, or 0.3%, to
1,977.80, with energy and materials leading the losses. The Dow
Jones Industrial Average (DJI) dropped 41.93 points, or 0.3%, to
17,071.22. The Nasdaq Composite (RIXF) shed 6.34 points, or 0.1%,
to 4,505.85.
10-year U.S. Treasury note rallied, pushing yields down to
2.49%, while gold added $2 to 1,217.1.
At least some of the early unrest in the market stemmed from
violent pro-democracy clashes in Hong Kong over the weekend and on
Monday, which forced some banks and businesses to close and pushed
the Hang Seng Index 1.9% lower. Meanwhile, the dollar eased after
hitting its highest level in more than six years against the yen on
the perception that the U.S. central bank is looking stronger than
its peers around the globe.
Jeffrey D. Saut, chief investment strategist at Raymond James,
wrote that the rising dollar, which has been on a bull run for the
past 11 weeks, has weighed on the price of commodities and precious
metals, while the S&P 500 has been stuck around the 2000 level
for three months.
"The dollar is currently the most overbought it has been in
decades. Watch the Dollar Index, if it makes a trading top and
begins a pullback look for a rally in stocks, as well as
commodities," he added. Read: Investors likely to focus on jobs
data
Two big events to watch during the week: "For us, this week is
about two things: ECB [European Central Bank] policy and nonfarm
payrolls," said Wouter Sturkenboom, a London-based investment
strategist at Russell Investment, referring to Thursday's ECB
meeting and Friday's payrolls. He said traders are expecting a
robust payrolls growth number of around 215,000. "Anything that
upsets that expectation will cause volatility, but that volatility
could go either way." Read: Big rebound seen for U.S. jobs
growth
Also read: Tough job ahead for the ECB in Europe's week
ahead
Data: Consumer spending rebounded in August as Americans spent
more on heavy-duty items such autos and less on nondurable goods
like gasoline, while income increased as well.
Separately, a gauge of pending home sales fell 1% in August,
pulling back from an 11-month high in July, the National
Association of Realtors reported Monday.
Stocks to watch: DreamWorks Animation SKG (DWA) surged 26% after
The Hollywood Reporter said Japanese conglomerate SoftBank is
looking to acquire the animation studio.
Athlon Energy Inc (ATHL) jumped 25% on news Encana Corp. (ECA)
was planning on buying it for $5.93 billion in cash.
Shares of Ambit Biosciences Corp. (AMBI) climbed 87% to $15.34
on news Daiichi Sankyo Co. will acquire Ambit for about $315
million in cash.
European Union regulators are expected to publish a report on
Tuesday showing that the tax practices of Apple Inc. (AAPL) and
Fiat SpA violated EU law, according to a report in The Wall Street
Journal reported, citing sources. Apple shares fell 0.6%.
Late Friday, Yahoo! Inc. (YHOO) Chief Executive Officer Marissa
Mayer said the company is reviewing a letter from activist investor
Starboard Value, urging it to merge with AOL Inc.(AOL). Shares
eased 0.3%..
Options contracts on shares of Alibaba Group Holding Ltd.(BABA)
became available on Monday. Shares fell 2% on Monday to $88.75 and
are down 5.5% from the closing price on the first trading day.
Janus Capital Group Inc. (JNS) shares fell 7.5%. On Friday,
Pimco founder Bill Gross said he would leave Pimco to take a job at
Janus. Morgan Stanley upgraded Janus shares to equal weight on the
view that more assets will follow Gross than the market expects.
Read more about the day's notable stocks in Movers &
Shakers.
Elsewhere, Hong Kong markets slipped on the back of its
protests, while the rest of Asia finished mixed. Europe stocks
eased back with miners under pressure in London, partly due to
China-growth worries.
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