After moving moderately lower in early trading on Monday, stocks moved back to the upside over the course of the session, ending the day nearly flat. A relatively light day on both the corporate and economic news fronts contributed to the lackluster performance.
The major averages ended the day almost unchanged, showing moves of less than a tenth of a percent. The Dow dipped 3.56 points to 13,271.64, the Nasdaq edged down 0.38 points to 3,076.21 and the S&P 500 inched down 0.03 points to 1,418.13.
Profit taking contributed to the early weakness on Wall Street, with some traders cashing in on the recent strength in the markets.
The pullback came after the Dow ended the previous session at its best closing level in over three months. The Nasdaq and the S&P 500 reached four-month closing highs last Friday.
Disappointing quarterly results from Lowe's (LOW) also generated some negative sentiment, with the home improvement retailer falling by 5.8 percent on the day.
Lowe's reported second quarter earnings of $0.64 per share on sales of $14.3 billion, while analysts had expected earnings of $0.70 per share on sales of $14.5 billion. The company also lowered its full-year earnings guidance.
Nonetheless, selling pressure waned not long after the open, as traders seemed somewhat reluctant to sell stocks and miss out of any further upside for the markets.
Stocks subsequently climbed well off their worst levels, although buying interest also remained subdued, leading to the roughly flat close.
Among individual stocks, shares of Coventry Health Care (CVH) moved sharply higher after the health insurer agreed to be acquired by rival Aetna (AET) in a transaction valued at $7.3 billion, including the assumption of Coventry debt. Coventry jumped 20.3 percent on the news.
Under the terms of the agreement, Coventry stockholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share, or $42.08 per share based on Aetna's closing on Friday.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index crept up by 0.1 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.
Meanwhile, the major European markets all moved modestly lower on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index dipped by 0.2 percent and 0.1 percent, respectively.
In the bond market, treasuries showed a lack of direction over the course of the trading day before ending the session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.814 percent.
Most of the major sectors showed only modest moves on the day, although housing stocks came under pressure on the heels of the disappointing earnings news from Lowe's.
Reflecting the weakness in the housing sector, the Philadelphia Housing Sector Index fell by 1.3 percent, pulling back off last Friday's nearly four-year closing high.
Meanwhile, airline stocks moved sharply higher over the course of the trading day, driving the NYSE Arca Airline Index up by 2.9 percent. With the gain, the index reached a one-month closing high.
The strength that emerged among airline stocks came as some major airlines joined in on an airfare increase initiated by Southwest Airlines (LUV) last Friday.
Trading activity is likely to remain relatively subdued on Tuesday amid another light on the U.S. economic calendar.
by RTT Staff Writer
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