Investors returned from the Thanksgiving weekend slightly worried about the "fiscal cliff" and economic situation in Europe, resulting in a mixed session on Monday.
The Dow Jones Industrial Average, down nearly 110 points in early trading, closed with a loss of 42.31 points at 12,967.37. The Nasdaq Composite Index gained 9.93 points to 2,976.78, and the S&P 500 Stock Index slipped 2.86 points to 1,406.29.
The Nasdaq was powered by two bellwether stocks. Apple Inc. (Nasdaq: AAPL) gained $18.03 to $589.53, continuing its rally from last week. And, a positive rating from a Wall Street analyst pushed up Facebook Inc. (Nasdaq: FB) shares by $1.94 to $25.94.
Commodities were little changed. Gold fell $1.80 to $1,749.60 an ounce, and oil was down 54 cents to $87.74 a barrel.
UnitedHealth Group Inc. (NYSE: UNH) slumped 0.7 percent after providing a profit forecast below estimates. DreamWorks Animation SKG Inc. (Nasdaq: DWA) lost 5.2 percent as “Rise of the Guardians” opened in fourth place in cinemas over the Thanksgiving weekend. Best Buy Co. (NYSE: BBY) and eBay Inc. (Nasdaq: EBAY) rallied at least 4.9 percent while Macy’s Inc. (NYSE: M) slumped 4.5 percent as retailers extended deals into so-called Cyber Monday.
“We’ve got a lot of negatives,” said Peter Sorrentino, who helps manage about $14.6 billion of assets at Huntington Asset Advisors in Cincinnati. “There’s the backdrop of what’s going on in the European Union with the bailouts and recapitalizing the banks. On top of that, we have issues in the U.S. with regard to our fiscal policy. That’s just enough reason at this point in time to take risk off the table and wait for more insight and clarity.”
Congress returns from the Thanksgiving recess this week, seeking a budget deal to avoid $607 billion of automatic tax increases and spending cuts from kicking in next year. While Republicans favor raising federal tax revenue by limiting deductions, Democrats have pushed for higher rates on upper- income earners.
The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession and a jobless rate of about 9 percent, compared with the October rate of 7.9 percent.
“Fiscal-cliff negotiations are likely to be the immediate focus this week,” Jim Reid, a strategist at Deutsche Bank AG (NYSE: DB) in London, wrote in a report. “As a reminder of the gathering urgency there are only 36 days left until the fiscal cliff is due to kick in, and from a practical stand point, exactly four weeks until the Christmas break to bridge the outstanding gap between the Democrats and Republicans.”
Euro-area finance ministers meet in Brussels for a third time this month to try to release an aid payment to Greece and produce a plan to keep the country a solvent member of the currency bloc. They failed to make the decisions in two previous meetings this month.
A breakthrough hinges on the ministers coming up with 10 billion euros ($13 billion) to fill the financing gap that emerged when Greece this month got two more years to meet deficit-reduction targets.
Morgan Stanley’s Adam Parker predicted the S&P 500 will end next year at 1,434, or 1.8 percent above the equity gauge’s closing level on Nov. 23. Parker, the N.Y.-based U.S. equity strategist at the firm, wrote in a note Monday that “the acuteness” of issues such as the U.S. deficit and debt levels, European crisis and slowing emerging markets growth are “less sharp” than they have been in the last two years.
His forecast is the second-lowest out of eight strategists tracked by Bloomberg, following UBS AG’s (NYSE: UBS) Jonathan Golub, who has a 2013 prediction of 1,425.
Seven out of 10 groups in the S&P 500 slid. Telephone, energy and consumer-staple companies posted the biggest losses, retreating at least 0.7 percent. Investors sold shares of companies most-tied to economic growth. The Morgan Stanley Cyclical Index fell for the first time in five days, sliding 0.3 percent.
Utility stocks climbed 1.3 percent for the best performance among 10 S&P 500 groups. Exelon Corp. (NYSE: EXC) rallied 2.6 percent to $29.32.
Boston Scientific Corp. (NYSE: BSX) rallied 1.3 percent to $5.66. The company was raised to buy from neutral by Citigroup Inc.’s (NYSE: C) Matthew Dodds, who cited the “high likelihood” that St. Jude Medical Inc.’s (NYSE: STJ) Durata leads -- wires that connect defibrillators to the heart -- will be withdrawn from the market within six months.
Yahoo! Inc. (Nasdaq: YHOO) rose 1 percent to $18.76. Goldman Sachs Group Inc. (NYSE: GS) added the company to its “conviction buy” list and raised its price estimate for the shares by 9.1 percent to $24.
Knight Capital Group Inc. (NYSE: KCG) jumped 13 percent to $2.82. A person with direct knowledge of the matter said the company, which was bailed out by six financial firms in August after losing $457 million in a trading error, expects to receive acquisition proposals as early as this week. Chicago-based Getco LLC, one of the rescuers, and Virtu Financial LLC in New York are among the likely bidders, said the person, who requested anonymity because the negotiations are private.