By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks traded in a narrowly mixed
range on Monday, as buyout chatter helped to offset Japan's
weaker-than-forecast second-quarter growth.
The S&P 500 (SPX) edged down 2 points, or 0.1%, to 1,689,
while the Dow Jones Industrial Average(DJI) dipped 5 points, or
less than 0.1%, to 15,420.
But the Nasdaq Composite (RIXF) gained ground, tacking on 9
points, or 0.3%, to 3,669, following last week's 0.8% decline.
A 3% gain by Apple Inc.(AAPL) provided a lift to the tech-heavy
index, after a report over the weekend that the next iPhone will
debut Sept. 10. Investors also were digesting a price-target cut
for Apple by Needham analysts.
The Dow had been down as much as 0.4% out of the gate. Last
week, the blue-chip index lost 1.5% to snap a six-week winning
streak, and the S&P 500 shed 1%.
On Monday, IT and telecom stocks were performing best among
S&P sectors, as energy and utilities fared worst. Caterpillar
Inc. (CAT) and Cisco Systems Inc.(CSCO) did best among Dow
components, while Exxon Mobil Corp.(XOM) and Walt Disney Co.(CVX)
were laggards.
Japan's disappointing economic report accounted for the negative
open, but then takeover talk helped stocks pare losses, said Kim
Forrest, senior equity analyst at Fort Pitt Capital Group. She
pointed to BlackBerry Ltd. (RIMM) saying it's considering a sale,
alongside buyout speculation swirling around U.S. Steel Corp.
(X)
"That's sort of making the rounds," Forrest told MarketWatch.
"Gains in either are not driven by fundamentals."
BlackBerry, the struggling smartphone maker, surged 12%, while
U.S. Steel added 2%.
Forrest suggested stocks are somewhat stretched. Her team is
focused on longer-term, value investing, and it's sticking with a
year-end price target of 1,625 for the S&P 500. "Stock prices
have outperformed the actual results of the companies," she
said.
Bruce Bittles, chief investment strategist at R.W. Baird, also
said he views the stock market as somewhat extended.
"Over the very near term, we anticipate that the summer rally
will resume and could carry into early September," he said in
emailed comments Monday. "But the rise in stock values this summer
has also introduced more risk in the market. Valuations are
stretched."
He added that the strongest support for stocks continues to be
Federal Reserve policy, but improving economic conditions are
associated with a less stock-market-friendly Fed.
In Japan, the Nikkei 225 shed 0.7% on Monday on news the
country's gross domestic product grew by 2.6% in the second
quarter, missing forecasts for 3.6%.
"It's a big miss," said Fort Pitt's Forrest. "That's kind of a
cautionary note to the bankers of the world who think they can fix
their economies."
Other Asian markets gained ground on Wednesday. The Shanghai
Composite and Hong Kong's Hang Seng Index finished 2.4% and 2.1%
higher, respectively, after a report that Beijing was "quietly
offering financial stimulus" to key cities and provinces to support
the local economies.
European stocks closed slightly higher on Monday amid the mixed
news from Asia.
Gold was up after a major gold-oriented exchange-traded fund
logged its first increase in holdings since June. Meanwhile, oil
dipped and the dollar advanced.
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