NEW YORK (CNN/Money) -
The latest sour economic and retail numbers added to Wall Street's existing concerns about a pending war with Iraq and left U.S. stock markets somewhat bruised Monday, with the Dow managing a modest gain, while the rest of the market stuck close to unchanged.
The Dow Jones industrial average (up 29.07 to 8332.85, Charts) and the Standard & Poor's 500 index (up 3.99 to 879.39, Charts) managed to score some gains for the day, but the Nasdaq composite (down 8.77 to 1339.54, Charts), on track for its worst December on record, finished lower.
Low volume, a trend toward rising oil prices, and brewing tensions with North Korea contributed to the market's volatility.
"You've got two things: a horrible retail environment ... and oil prices are up to $32 a barrel," said Michael Carty, principal at New Millennium Advisors. "When energy prices rise they pervade all aspects of the economy and costs go up. ... The big thing overhanging the market is what we are going to do with Iraq."
With only one trading day left for 2002, Wall Street is set to record a third straight year of losses, its longest bear market stretch in more than 60 years. At the end of trading Monday, the Dow was down nearly 17 percent for the year, the Nasdaq sported a loss of more than 31 percent, and the S&P 500 was down more than 23 percent. The last time stocks kept falling for three years in a row was a period that ended in 1941.
On Monday, market breadth was mixed, with gainers taking over losers on the New York Stock Exchange, where a little more than one billion shares changed hands. On the Nasdaq, decliners took the upper hand, leading winners by nearly 2 to 1, also as more than a billion shares traded.
Economic reports weigh
The day started on a sour note as two weaker-than-expected economic reports on the manufacturing and home sectors led to a slump in the market shortly after the open. This, combined with global instability and a trend toward higher oil prices, prevented stocks from rising as the session progressed.
The National Association of Realtors said the annual rate of existing home sales fell to 5.56 million homes in November from 5.76 million in October. Analysts surveyed by Briefing.com expected a smaller decline to a rate of 5.69 million.
Separately, the Chicago Purchasing Managers Index for December saw a greater-than-expected drop to 51.3 from 54.3 in November. Economists expected only a slight dip in the index to 53. The Chicago index is a precursor of the national number, due out Thursday. A reading below 50 indicates contraction in the manufacturing sector.
Meanwhile, some major retailers reported mediocre holiday sales Monday.
Federated Department Stores (FD: up $0.56 to $28.08, Research, Estimates), owner of the Macy's and Bloomingdale's chains, said it believes sales at its stores open at least a year fell 2.5 percent in December. Investors took little solace in the fact that the low number was an improvement from the 7.4 percent decline in same-store sales in November.
Federated said combined sales for November and December likely fell 4.5 percent.
The world's largest retailer, Wal-Mart (WMT: up $1.48 to $50.64, Research, Estimates), said its sales probably rose 2 to 3 percent in December, reaffirming its guidance from last week. The increase, well below previous projections, was over a period that was particularly weak for retailers following the Sept. 11, 2001, terrorist attacks.
Both stocks rose Monday, but the overall feeling of gloom about the retail sector helped keep the broader market confined in a tight range.
Bucking the trend, J.C. Penney (JCP: up $0.82 to $22.89, Research, Estimates) said its department store sales beat its own predictions. The stock rose in response.
Oil concerns
Although oil prices finished the day somewhat lower Monday, the cost of oil has been rising stedily in the past several months, reaching a two-year high earlier in the day. The exalating tensions between the United States and Iraq, as well as a continuing strike by oil workers in Venezuela, have been blamed for the latest spike. Light crude oil for February delivery fell $1.35 to $31.37 a barrel in New York.
Gold also fell after reaching its highest since April 1997 on Friday. The yellow metal settled at $344.10 an ounce in New York, down $5.60 an ounce for the day.
European markets closed higher, while Asian-Pacific stocks ended lower across the region Monday.
The dollar fell more than a yen against the Japanese currency and was little changed against the euro. Treasury prices rose slightly, with the 10-year Treasury yield falling to 3.79 percent.
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