Split Decision On Wall Street

The major averages ticked higher at the start of trading, reclaiming a portion
of the losses they posted during Friday’s profit taking. The advance lost steam
in the mid-morning, despite a better-than-expected reading from the ISM
manufacturing index. The early swoon took the Dow into negative territory and
brought the Nasdaq off its highs, and the broader indices spent much of the
middle of the day with a mixed performance.

Upward momentum resurfaced in the mid-morning, with the Nasdaq rallying to a new
high for the day and the Dow returning to positive territory. Going into the
close, however, stocks slipped again and finished the day with a split decision.
The Nasdaq finished with a gain of about 0.5%, reclaiming much of Friday’s
decline. The Dow ended slightly below the unchanged mark. Dow -17.76, Nasdaq
+10.55, S&P 500 +1.17. NYSE Adv/Dec 1781/1473, Nasdaq Adv/Dec 1717/1390.

Oil prices climbed sharply on Monday, with many attributing the move to the
death of Saudi King Fahd and refinery concerns. The price of light, sweet crude
moved above $62 per barrel in the middle of the day, but came off its highs late
in the session and finished a bit below that mark. Light, sweet crude ended
higher by about $1 per barrel on the day.

Commodity stocks were strong on Monday. Boosted by the rise in oil prices, the
energy segment was among the more notable movers to the upside. The oil service
space, which often leads moves in the energy group, gained 1.3% on the day.

The HMO space was another mover to the upside, led by Humana
(HUM), which rallied about 7% on earnings news. The sector climbed 1.8%, adding
to a rebound started last week. The Internet space recorded a notable advance,
with eBay
(EBAY) climbing nearly 4.4% on an upgrade from Smith Barney. The biotech and
airline sectors were also strong.

The utility sector dropped early in the session, dragged lower by
earnings-related declines in PSEG (PEG) and Entergy
(ETR). The sector came off its intraday lows in the afternoon, but still
finished with a decline of more than 1%.

The Institute
for Supply Management revealed that its manufacturing index came in 56.6%
for July, up from June’s reading of 53.8%. Economists had expected the measure
of national manufacturing activity to tick up, but only to a level of about
54.5%.

In another economic report released during the mid-morning, the Commerce
Department revealed that total construction spending fell 0.3% in June.
Economists had expected an increase of 0.5%. While the measure posted a
month-over-month decline, it still represented a 7.9% increase compared to the
same time last year.

Treasury yields climbed through much of the morning on Monday, and drifted a bit
off their highs in the afternoon. The 10-year yield gained 3.3 basis points on
the day to close at 4.319%, moving above a trading range that had held it for
about a week and a half. The 10-year yield also reached its highest level since
mid-April.

Data on personal income and spending are due out before the start of trading
Tuesday. Economists expect personal income to climb by 0.4% in June after a 0.2%
rise in May. Personal spending is projected to rise by about 0.8%. About a half
hour after the start of trading, information on June factory orders is set to be
announced, with economists predicting a 1% rise in the month.