By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks reversed a small early
decline to post equally modest gains Monday, as investors kept an
eye on rising Treasury yields and weighed expectations the Federal
Reserve will move soon to curtail the monetary stimulus it provides
to the economy.
The Dow Jones Industrial Average (DJI) rose 5.34 points, or less
than 0.1%, to 15,086.81, while the S&P 500 (SPX) gained 1.92
points, or 0.1%, to 1657.75. The Nasdaq Composite (RIXF) rose 17.39
points, or 0.5%, to 3,620.11.
"Wall Street hates uncertainty, and right now discerning the
appropriate yield on the 10-year Treasury note is resulting in an
awful lot of uncertainty," said Sam Stovall, chief equity
strategist at S&P Capital IQ, in a note.
Treasury yields continued to push higher, exploring territory
last seen in July 2011. The yield on the 10-year Treasury note
(10_YEAR) rose 4 basis points, or 0.04 percentage point, to
2.87%.
Rising yields can undercut stocks due to fears that higher
borrowing costs will slow economic activity. Yields have been on
the rise since this spring, when Federal Reserve Chairman Ben
Bernanke indicated the Fed could begin scaling back its $85
billion-a-month bond-buying plan later this year.
While stocks recovered from a June pullback fueled by concerns
over the Fed's plans, markets stumbled last week as the 10-year
yield rose to two-year highs.
With no major economic data due on Monday, investors are looking
ahead to the release Wednesday of the minutes of the latest meeting
of Fed policy makers, as well as the Kansas City Federal Reserve's
annual retreat in Jackson Hole, Wyo., at the end of the week.
Bernanke, however, won't attend the Jackson Hole conference, likely
undercutting its influence.
"With U.S. private-sector investors barely buying any
longer-dated Treasurys in recent years, the market is nervous about
how high yields have to be to lure them in," wrote Kit Juckes,
currency strategist at Société Générale in London. "On a day with
no data in a week with Jackson Hole as the main focus, nerves are
jangling and a yield overshoot possible."
Shares of Intel Corp. (INTC) rose nearly 3%, making it the Dow's
biggest gainer. The rise came after Piper Jaffray analyst Auguste
Gus Richard raised the stocks' rating to neutral from underweight,
citing potential gains from the corporate market and the coming
release of Windows 8.1.
J.P. Morgan Chase & Co. (JPM) fell 1.5%, making it the
largest loser in the Dow. News reports said U.S. regulators are
looking into the bank's hiring practices in China.
Shares of Cliffs Natural Resources Inc. (CLF) dropped 3.9%,
making it the biggest loser in the S&P 500. The decline comes
after a nearly 4% drop on Friday. Dollar General Corp. (DG) topped
S&P 500 gainers with a 2.6% rise.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires