Stocks mixed after disappointing manufacturing report

Stock prices were mixed on Monday after a report showed a significant drop in U.S. manufacturing activity.

The Dow Jones Industrial Average, up 278 points on Friday, fell 8.70 points to 12,871.39. However, the Nasdaq Composite Index was up 16.18 points to 2,951.23, and the S&P 500 Stock Index gained 3.35 points to 1,365.51.

The Institute for Supply Management reported Monday its manufacturing index decline in June for the first time in three years.

The markets will be sensitive to reports this week on employment. The official report from the Department of Labor for June employment will be released on Friday. Several other jobs reports will be released on Thursday.

Commodity prices dropped on Monday. Oil fell $1.21 to $83.75 a barrel. Concerns surfaced that Iran has threatened to shut the Strait of Hormuz in response to recent economic sanctions. Gold was down $6.50 to $1,597.70 an ounce.

Financial and technology shares in the S&P 500 advanced, while industrial and commodity companies declined. Micron Technology Inc. (Nasdaq: MU) rose 3.8 percent after agreeing to acquire Elpida Memory Inc., an Apple Inc. (Nasdaq: AAPL) supplier. Amylin Pharmaceuticals Inc. (Nasdaq: AMLN) added 8.9 percent as Bristol-Myers Squibb Co. (NYSE: BMY) agreed to pay $5.3 billion for the drugmaker. Best Buy Co. (NYSE: BBY) soared 5.9 percent after a report announced that founder Richard Schulze is close to making a bid for the electronics retailer.

“It’s way too early to talk about a recession,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees more than $2 billion, in New York. “Today’s data suggest at least some spillback from external economies into U.S. manufacturing. I wouldn’t go any further than that.”

About two stocks rose for each that fell on U.S. exchanges Monday. Earlier losses came as the Institute for Supply Management’s manufacturing index declined to 49.7 in June, worse than the most pessimistic forecast in a Bloomberg News survey. Figures less than 50 signal contraction.

The weakness in manufacturing indicates that the slower economic growth may promote more accommodative policies from the Federal Reserve, Princeton University economist Alan Blinder said Monday.

“Data like this that keep coming in are encouraging or strengthening the positions of the doves on the Fed,” said Blinder, a former Fed vice chairman. “You know there’s a big civil war going on in the Federal Reserve, and weakening the position of the hawks.”

Lincare Holdings Inc. (Nasdaq: LNCR) soared 22 percent to $41.34. Linde AG agreed to acquire Lincare for about $3.8 billion to add U.S. oxygen and respiratory therapy services delivered to the home, in the German company’s biggest acquisition since 2006.

For-profit college companies, such as Corinthian Colleges Inc. (Nasdaq: COCO) and Education Management Corp. (Nasdaq: EDMC), rose after a U.S. judge struck down regulations the day before they were to take effect that could have cut off their federal money. Corinthian jumped 11 percent to $3.21. Pittsburgh-based Education Management gained 3.3 percent to $7.18. A Bloomberg index of 13 for-profit colleges rose 1.2 percent.

MEMC Electronic Materials Inc. (NYSE: WFR) rallied 22 percent to $2.64. The second-largest U.S. polysilicon maker gained after announcing the sale of four solar farms in Europe with a total capacity of 98 megawatts.

Theravance Inc. (Nasdaq: THRX) rose 11 percent to $24.71 after a respiratory drug being developed with GlaxoSmithKline Plc did well enough in studies that regulatory approval may be sought ahead of schedule.

OpenTable Inc. (Nasdaq: OPEN) slumped 9.3 percent to $40.81. The largest U.S. online restaurant-reservation service fell after Barclays Plc issued a report that said the company may post its first-ever sequential decline in revenue.

THQ Inc. (Nasdaq: THQI) declined 6.5 percent to 58 cents. The video-game maker said it plans a 1-for-10 reverse stock split to maintain its Nasdaq Stock Market listing.