NEW YORK (CNN/Money) -
U.S. stocks closed mixed Monday, with blue chips managing a late session rise as oil fell below $40 a barrel, while technology shares declined, thanks to a bearish Merrill Lynch note on the semiconductor sector.
The Dow Jones industrial average (up 25.00 to 10,238.22, Charts) gained 0.25 percent and the Standard & Poor's 500 (up 1.54 to 1,114.35, Charts) index gained 0.1 percent. Both had been in negative territory in the morning and early afternoon.
The Nasdaq composite (down 9.41 to 1,936.92, Charts) lost 0.5 percent, having been down more than 1 percent earlier.
Merrill Lynch's downgrade of the chip sector and a few individual stocks weighed on the market through the morning and early afternoon, but that pressure seemed to ease up by the late afternoon, in combination with a bout of short covering, analysts said.
A variety of blue chips gained, as oil reversed course, turning lower. But the blue chip recovery failed to spark a broad rally as investors continued to take profits on a number of chip and other tech names.
"Until we get the full force of earnings and economic data later in the week, I kind of expect us to remain at the lower end of the trading range," said Peter Cardillo, chief market analyst at S.W. Bach & Co.
Although second-quarter earnings reports began arriving last week from companies such as Alcoa and Yahoo!, this week offers a much larger batch of figures.
Intel (INTC: down $0.33 to $26.24, Research, Estimates) brings the week's most-anticipated earnings release. Due after the close Tuesday, Wall Street analysts expect the company to have earned 27 cents per share in the last quarter, versus 14 cents a year earlier.
Shares tumbled Monday under the weight of the Merrill Lynch downgrade.
In addition to Intel, reports are due from Merrill Lynch (MER: up $0.13 to $51.47, Research, Estimates) Tuesday morning, as well as Johnson & Johnson (JNJ: down $0.10 to $54.89, Research, Estimates) and Apple Computer (AAPL: down $0.89 to $29.14, Research, Estimates) later in the week.
While earnings in the second quarter are supposed to show more than 20 percent growth over the year-earlier quarter, the recent slew of warnings and downgrades has caused some jitters for investors.
Most of the economic news is likely to be ignored this week, due to the heavy slew of corporate news, said Art Hogan, chief market analyst at Jefferies & Co.
"Also bear in mind, we're going to be focusing more on the election in the next few weeks, as we work our way closer to the DNC (Democratic National Convention)," he added.
The Democratic National Convention is scheduled for July 26 through 29.
Blue chips gain, techs wane
Among the blue chips rising, Dow components Caterpillar (CAT: up $1.15 to $78.23, Research, Estimates), General Electric (GE: up $0.43 to $32.60, Research, Estimates), IBM (IBM: up $1.06 to $84.95, Research, Estimates) and McDonald's (MCD: up $0.31 to $26.82, Research, Estimates) all gained more than 1 percent.
Among other gainers, shares of Citizens Communications (CZN: up $1.00 to $14.11, Research, Estimates) rose 7.6 percent and topped the New York Stock Exchange's most-active list. The rural telephone company announced it would pay a special one-time dividend of $2 per share and set an annual dividend rate. The company's CEO also resigned Sunday.
Technology and the Nasdaq remained in the red.
Merrill Lynch downgraded the global chip sector early Monday to "underweight" from "overweight," pointing to weaker demand for PCs and corporate hardware.
The firm also downgraded a number of individual stocks, including Applied Materials (AMAT: down $0.48 to $18.18, Research, Estimates) and Novellus Systems (NVLS: down $1.33 to $29.72, Research, Estimates). The downgrade of Novellus overshadowed the company's higher quarterly earnings, released Monday morning.
The Philadelphia Semiconductor (down 9.96 to 441.18, Charts) index, or the Sox, lost 2.2 percent, having been down as much as 3.5 percent earlier.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers nine to seven as 1.10 billion shares changed hands. On the Nasdaq, decliners topped advancers by more than nine to seven as 1.49 billion shares traded.
Treasury prices inched higher, pushing the 10-year note yield to 4.44 percent from 4.46 percent Friday. The dollar was mixed versus the euro and yen.
Among commodities markets, NYMEX light crude oil futures fell 50 cents to settle at $39.64 a barrel. COMEX gold added 50 cents to settle at $408.40 an ounce.
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