By Kristina Peterson, MarketWatch
U.S. blue-chip stocks edged lower on Monday, as corporate
downgrades and worries about the health of euro zone finances
overshadowed the weekend's deal activity.
The Dow Jones Industrial Average (DJI) slipped 17 points, or
0.1%, to 12,256. Weighing on the measure, Wal-Mart Stores Inc.
(WMT) fell 1% after J.P. Morgan cut the company's stock investment
rating to neutral from overweight, predicting that same-store sales
deterioration could last for years, not quarters. Verizon
Communications (VZ) was also weak, down 1.2%.
Keeping the Dow's losses in check, General Electric Co. (GE)
rose 1.1% after the conglomerate agreed to buy the well-support
division of U.K. firm John Wood Group PLC for $2.8 billion in cash
to bolster its oil and gas services business in areas like
extracting natural gas from shale.
The Nasdaq Composite (RIXF) edged up 0.3% to 2,818. The Standard
& Poor's 500-stock index (SPX) turned slightly higher, trading
up 0.1% at 1,331.
Investors on Monday waited for details of President Barack
Obama's budget proposal for fiscal year 2012, which will be
released at 10:30 a.m. EST. The White House projected that the
federal deficit would spike to $1.65 trillion in the current fiscal
year, the largest dollar amount ever, fueled in part by a tax-cut
extension that the president and Republican lawmakers brokered in
December.
A stronger dollar weighed on stocks Monday morning as the euro
sank to a three-week low against the dollar. Worries about the
strength of German bank WestLB added to renewed euro-area sovereign
concerns, sending the euro to $1.3484, down from $1.3560 late
Friday in New York.
Investors worried about the region's ability to regain its
footing.
"There's just no way those countries can come up with the
money," to bail out troubled euro zone nations, said Barry James,
president and chief executive of James Investment Research. "They
have more debt coming due than the size of their economy," he said.
"Bailout or no bailout, something's going to give
Meanwhile, Asian equities were largely higher, boosted by a
surge in Chinese imports last month.
Among stocks in focus, Netflix (NFLX) shares rose 5.2% after the
company became the only paid video service to be a top-ten video
service on the web by total number of streams and unique visitors,
according to Nielsen.
MGM Resorts International (MGM) shares fell 2.8% after the
casino company's fourth-quarter loss narrowed significantly from a
year earlier but revenue declined and revenue per available room
fell on the Las Vegas strip.
U.S.-listed shares of Nokia Corp. (NOK) dropped 4.1%, extending
their Friday decline after the telecom equipment maker announced a
partnership with Microsoft. J.P. Morgan Cazenove downgraded Nokia
to underweight from overweight, saying that "the degree to which
the [Microsoft] deal is beneficial to Nokia is still unclear." On
Monday Nokia chief executive Stephen Elop said the company hopes to
launch its first smartphone based on Microsoft's Windows Phone
platform this year.
Seahawk Drilling (HAWK) shares tumbled 56% after the firm said
late Friday it would file for bankruptcy protection and sell its
assets to Hercules Offshore (HERO) , whose shares rose 21%.
Demand for U.S. Treasurys was mixed, with the two-year note
(UST2YR) flat and the 10-year note (UST10Y) up, sending its yield
down to 3.63%.
Crude-oil prices edged up, while gold futures advanced.