NEW YORK – Stocks finished narrowly mixed Monday as the Dow Jones industrial average fell for the fourth session in a row while the broader S&P 500 index ended slightly higher, lifted by gains in bank stocks such as J.P. Morgan.
The Dow Jones industrial average (search) ended down 16.26 points, or 0.16 percent, at 10,071.25, edging to a fresh 5 1/2 month low. But the Standard & Poor's 500 Index (search) was up 3.36 points, or 0.29 percent, at 1,145.98. The Nasdaq Composite Index (search) was up 4.77 points, or 0.25 percent, at 1,912.92.
The Nasdaq also ended higher, boosted by chip stocks such as Intel Corp. (INTC), which rose 9 cents to $22.21 after Wells Fargo upgraded the company. The Philadelphia Stock Exchange semiconductor index (search) rose 0.84 percent.
Stocks struggled to find a bottom after three straight triple-digit drops in the Dow Jones industrials, but sharply fluctuating prices and the lack of a solid recovery rally spoke to investors' continued nervousness about the possibility of inflation in the middle of a projected slowdown in economic growth.
"After you see a decline of the magnitude we saw Friday, you'd expect some degree of recovery, but we're not seeing much, and that's very uninspiring," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "This makes me believe that we may have further to go before we find a bottom here."
Stocks tumbled to 5 1/2-month lows on Friday as disappointing results from International Business Machines Corp. (IBM) heightened investor concerns about an economic slowdown and made Wall Street skittish about the earnings season.
World markets dropped precipitously in aftershocks from Friday. Tokyo markets were further pressured by deteriorating relations with China, while Europe was worried about lackluster corporate earnings as well.
"You have three days like last week and it lowers the bar somewhat," said Bryan Piskorowski, market analyst at Wachovia Securities LLC. "That oversold condition stretches like a rubber band and snaps back. It's nothing that you build a brave new world off (of), but it's a technical type of correction for the market."
However, the weakness in the Dow meant traders were now eyeing the 10,000 mark as the next level to worry about. Stocks last tumbled to that level in October 2004.
"We're still watching the 10,000 level (on the Dow) for support — it's more psychological than anything," said Mike Driscoll, Bear Stearns listed trader and managing director.
Oil prices moved in and out of negative territory, adding to Wall Street's uncertainty. A barrel of light crude dipped 12 cents to settle at $50.37 on the New York Mercantile Exchange (search).
The volatility and lighter volume in trading may have been due to a pair of economic reports due later in the week — the Producer Price Index, which measures wholesale prices increases, on Tuesday and its counterpart, the Consumer Price Index, on Wednesday. With fears of inflation and the likelihood of higher interest rates of paramount concern, investors may have been holding back on a recovery rally until the numbers were released.
"These are very important reports, and it's not surprising that investors would pay considerable attention to them," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "This will forecast the state of the economy and what the Federal Reserve might do with interest rates, and it's not surprising investors would be skittish taking large positions in front of that."
3M (MMM), a Dow component and benchmark for the U.S. economy, fell $4.96 to $75.90 after it posted disappointing revenues. The company makes items such as Scotch tape and Post-It notes.
However, J.P. Morgan Chase & Co. (JPM) rose 2.1 percent, or 71 cents, to $34.64, after Banc of America Securities Monday raised its investment rating to "buy" from "neutral."
Bank of America Corp. (BAC) , the No. 3 U.S. banking company, topped Wall Street expectations, sending its shares up 1 percent, or 45 cents, to $44.73 and lifting shares of other bank stocks. And SunTrust Banks Inc., the No. 7 U.S. bank, gained 1.5 percent, or $1.04, to $71.20 after reporting higher earnings. The Philadelphia KBW Bank Index rose 1.26 percent.
Adobe Systems Inc. (ADBE) announced it will pay $3.4 billion in stock to acquire fellow software maker Macromedia Inc. (MACR), combining the latter's Web-design software with Adobe's document design offerings. Adobe dropped $6.66, or 11 percent, to $54, while Macromedia climbed $2.92, or 8.7 percent, to $36.37.
General Motors Corp. (GM) rose 59 cents to $26.19. On Tuesday, the company is set to post its steepest quarterly loss since 1992, with its core automotive unit expected to lose more than $1 billion, analysts said.
Online auctioneer eBay Inc. (EBAY) which reports this week, helped the Nasdaq, up 63 cents, or almost 2 percent, at $32.60.
Trading was heavy, with 1.75 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.89 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Advancers outnumbered decliners on the New York Stock Exchange by about 10 to 7 and were even on Nasdaq.
The Russell 2000 index of smaller companies was up 4.46, or 0.8 percent, at 585.24.
European investors were worried about lackluster corporate earnings in addition to Wall Street's selloff. Britain's FTSE 100 closed down 1.32 percent, Germany's DAX index shed 2.55 percent, and France's CAC-40 dropped 2.05 percent for the session.
Reuters and the Associated Press contributed to this report.