By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market struggled to
find a direction on Monday, as the key benchmarks retreated from
record levels after a batch of mixed economic reports.
The ISM manufacturing survey index rose in October, but the
final PMI index and construction spending fell. Manufacturing data
from Europe and China was equally disappointing.
The S&P 500 (SPX) was about flat
The Dow Jones Industrial Average (DJI) drifted d lower.
Meanwhile, the Nasdaq Composite (RIXF) edged up.
Monday's quiescent trading is in constrast to Friday, when the
S&P 500 and Dow industrials soared into record territory,
getting a fresh push after the Bank of Japan surprised markets with
an unexpected stimulus plan.
Earnings support stocks: While U.S. stocks caught a good
tailwind from more central-bank stimulus, Dan Greenhaus, chief
strategist at BTIG, said in note that earnings should help stocks
to maintain gains. Earnings are growing at a nearly 10% pace, and
revenue is up 4% to 5%, beating expectations, based on the nearly
375 S&P 500 companies that have reported, he noted. Read:
Forget the BoJ! Earnings hold the key for U.S. stocks.
"As we've said for several quarters now, that is pretty darn
good and should be enough to support higher stock prices," he said.
Need to Know: Look to China as post-QE blues tangle with V-bottom
bliss
Analysts said markets will be keeping a close eye on Tuesday's
midterm elections, with a survey by The Wall Street Journal/NBC
News showing Republicans could control Congress by a slim margin.
Also read: 21 stocks that would win with a Republican Congress
In economic news, U.S. manufacturing companies expanded at a
faster rate in October as new orders rose to the second highest
level in five years, a survey of executives found.
The report contradicts the final reading of Markit's U.S.
manufacturing purchasing managers index, which was 55.9 in October,
down from the flash reading of 56.2 and well below September's
57.9. The final reading is the lowest since August.
Outlays for U.S. construction projects fell unexpectedly in
September to a seasonally adjusted annual rate of $950.9 billion,
the U.S. Commerce Department reported Monday.
Looking further ahead, this is the week for the monthly U.S.
jobs report, due Friday. On Thursday, markets will be watching a
meeting of the European Central Bank.
Stocks to Watch: Shares of Sapient Corp. (SAPE) surged 41% after
French advertising group Publicis SA announced a $3.7
billion-all-cash deal to buy the U.S. company. Publicis will pay
$25 for each Sapient share, which represents a 44% premium to the
closing price of Sapient on Oct. 31.
Laboratory Corp. of America Holdings (LH) said it would buy
Covance Inc. (CVD) for $5.9 billion in cash and stock. Laboratory
shares dropped 7.7%, making it the biggest loser on the S&P
500. Covance shares jumped 25%.
Apple Inc. (AAPL) is planning an investor call on Monday ahead
of a potential bond sale, The Wall Street Journal reported, citing
a banker working on the deal.
Argentina has banned Procter & Gamble Co. (PG) from doing
business in that country, alleging that the consumer products giant
has committed tax fraud, media reports said Monday. The company
told the BBC it was working to understand and resolve those
allegations.
Sysco Corp. (SYY) said it no longer expects its acquisition of
US Foods to close this year, as it reported quarterly earnings,
while Herbalife Ltd. (HLF) and AIG Inc. (AIG) to report after the
close.
Dollar above Yen113: The dollar (USDJPY) shot 1% higher against
then yen on Monday, trading around Yen113.42, while gold (GCZ4)
continued to drift lower and oil (CLZ4) inched up. Europe stocks
drifted lower across the board. Asia markets were mixed, and Tokyo
was shut for a holiday.
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