By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks ended a choppy session
little changed on Monday after Standard & Poor's Ratings
Services revised its U.S. credit-rating outlook to stable from
negative and consumer shares lost ground.
After swinging between gains and losses during the session, the
Dow Jones Industrial Average (DJI) finished down 9.53 points, or
0.06%, to 15,238.59, with 14 of its 30 components in positive
terrain.
Walt Disney Co. (DIS) fell 1.6%, the biggest decliner in the
Dow.
The blue-chip index had rallied more than 200 points on
Friday.
Among Dow gainers, McDonald's Corp. (MCD) added 1.3% after it
posted stronger-than-expected same-store sales for May. The
fast-food giant is benefiting from its expanded menu.
The S&P 500 (SPX) dipped 0.57 point to end at 1,642.81, with
consumer discretionary the biggest laggard and telecommunications
the biggest gainer among its 10 major industry groups.
The Nasdaq Composite (RIXF) gained 4.55 points, or 0.1%, to
finish at 3,473.77.
Before the market open Monday, Standard & Poor's revised its
credit-rating outlook for the U.S. to stable from negative,
indicating the likelihood of a near-term downgrade is less than one
in three. S&P also affirmed its AA+/A-1+ sovereign-credit
ratings for the U.S.
In Montreal, St. Louis Federal Reserve President James Bullard
said that improved labor-market conditions suggest the Fed could
slow the pace of bond purchases, but surprisingly low inflation may
mean the Fed can maintain its aggressive program over a longer time
frame.
Investors are closely monitoring data and Fed speeches for any
clues as to when the central bank may start scaling back its $85
billion in monthly bond purchases.
Last week, U.S. stocks staged an upside reversal to close higher
for the week, helped by the government's May employment report.
Stocks had suffered weekly losses for two straight weeks, but then
last week the S&P 500 found buyers at its 50-day moving average
for the third time this year.
Bruce Bittles, chief investment strategist at R.W. Baird,
suggested on Monday that the market is digesting its advance at the
end of last week. He told MarketWatch that he expects the S&P
500 to stay in a trading range between about 1,600 and 1,660 until
the Fed's June 18-19 meeting.
The central bank won't make a policy change at that meeting,
according to Bittles, but the uncertainty around the meeting will
be enough to keep stocks range-bound. Bittles noted the May jobs
report had some less-than-impressive aspects, such as a loss in
manufacturing jobs and a downward revision to April's numbers.
"We have not even approached escape velocity. The Fed is going
to keep on keeping on, as far as I'm concerned," he said. Bittles
said it's hard to figure out the effect of Monday's S&P outlook
news, noting that Treasurys actually rose in 2011 when S&P
downgraded its credit rating for the U.S.
Brian Belski, chief investment strategist at BMO Capital
Markets, described the recent jobs report as "not too hot, not too
cold." In other words, it hit the sweet spot that many strategists
had been looking for.
Belski said in an interview Monday that he remains in the
"correction camp" in the near term. He said there needed to be a
washout of "some of the recent buyers who have been chasing
performance" after missing out on earlier stock gains. But on a
longer-term basis, he said he's "very bullish" on equities,
especially U.S. stocks.
Mark Luschini, chief investment strategist at Janney Montgomery
Scott, said there's a "void of economic information" at the moment,
so the market on Monday was still reacting a little to the positive
news from last week.
Luschini said the market is getting "a little Fed-governor-speak
fatigue." The central bank's officials have been delivering
speeches frequently and not providing a clear message, probably
deliberately, he said.
Among tech stocks, Apple Inc. (AAPL) slipped 0.7%. At its
Worldwide Developers Conference on Monday, the company unveiled its
latest mobile-operating system, a new music-streaming service
called iTunes Radio and updates to its line of MacBook
computers.
Google Inc. (GOOG) rose 1.2% after reports that the
Internet-search giant was close to reaching a $1.1 billion deal to
buy Israeli map-software provider Waze.
Facebook Inc. (FB) rallied 4.5% after Stifel upgraded the social
network's shares to buy.
Monsanto Co. (MON) was among the top gainers in the S&P 500.
It rose 4.5% after an upgrade from Macquarie analysts.
For-profit educator Apollo Group (APOL) was another big winner
in the S&P 500, advancing 4.4%. It might be getting a boost
from talk that the for-profit-schools sector is fertile ground for
bargain hunting.
In the home-building sector, J.P. Morgan downgraded Lennar Corp.
(LEN) to neutral from overweight, saying that the valuation
"appropriately reflects above-average fundamentals." Lennar shares
dropped 3.3%. Among other home builders, D.R. Horton Inc. (DHI)
fell 2.1% and PulteGroup Inc. (PHM) slipped 2%.
Stocks in Tokyo rallied Monday after a three-session loss, with
the Nikkei Stock Average finishing 4.9% higher at 13,514.20,
backing further away from bear territory, as the yen weakened.
Japanese equities benefited from an upward revision to Japan's
first-quarter GDP figure to 4.1% growth.
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