Wall Street withstands Chinese tumble
NEW YORK – Wall Street recovered from a mostly down session Monday, eking out a gain as investors brushed off another slide in Chinese stocks.
The market had little in the way of corporate or economic news to give it direction, but while it was in negative territory for much of the day, in the end it shook off an 8.3 percent slide in the benchmark Shanghai Composite Index. The Chinese index had its biggest one-day drop since the Feb. 27 plunge that set off a brief global market selloff as the Chinese government attempts to cool the country’s market boom.
Investors used Monday to adjust positions after both the Standard & Poor’s 500 index and Dow Jones industrial average surged to record closes in the previous session. The market was encouraged by economic data released last week that suggested the economy was slowing, but not too quickly, and inflation remained in check.
However, the Commerce Department reported Monday that orders to U.S. factories were weaker than expected in April. Investors might find some information to trade with the release of the Institute of Supply Management’s service sector index today. Not much other information is expected.
The Dow rose 8.21, or 0.06 percent, to 13,676.32.
Broader stock indicators were also narrowly higher. The S&P 500 index rose 2.84, or 0.18 percent, to 1,539.18, and the Nasdaq composite index rose 4.37, or 0.17 percent, to 2,618.29.
The Dow and S&P again snagged record closes Monday, and the S&P moved closer to its trading high of 1,552.87, set in March 2000.
The bond market moved higher, with the yield on the 10-year Treasury falling to 4.93 percent from 4.96 percent late Friday. The Commerce Department report had some impact on the bond market on hopes weaker data will mean an interest rate cut this year. The report showed 0.3 percent in manufacturing growth in April, and economists expected a rise of 0.7 percent after a 3.1 percent jump in March.
The dollar slipped against other major currencies, while gold prices rose.
Oil prices rose after a Nigerian militant group announced a one-month cease-fire, and a U.S. gasoline pipeline was restarted. A barrel of light sweet crude rose $1.13 to $66.21 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, while gold slipped.
Michael Sheldon, chief market strategist at Spencer Clarke, said the near term will be dominated by higher energy prices and bond yields – two catalysts that could cause the equities market to pull back. He believes there’s complacency among investors, and that the market will need a correction before resuming an advance later in the summer.
“As investors look ahead, we’re past the earnings season, the Fed seems to be out of the way for the moment, and we’ve had a run-up in equities prices over the past few months,” he said, referring to the Federal Reserve’s current policy of stable interest rates.
“Given continued uncertainty in the housing sector, and rising energy and food prices, it appears likely to us that we should have a period of consolidation or profit taking before the market turns higher again.”
Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume came to 1.34 billion shares, compared to 1.48 billion on Friday.
The Russell 2000 index of smaller companies was up 1.68, or 0.20 percent, at 855.09.
Overseas, Japan’s Nikkei stock average closed up 0.08 percent. At the close, Britain’s FTSE 100 was down 0.19 percent, Germany’s DAX index dropped 0.14 percent, and France’s CAC-40 shed 0.69 percent.