Stocks lose their spark

Major gauges struggle after investors return from holiday break, bonds fall, oil gives up gains.

By Jessica Dickler, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Stocks struggled in midday trade Thursday as high oil prices and rising Treasury yields overshadowed the latest deal news.

The Dow Jones industrial average (down 22.36 to 13,554.94, Charts) was down 0.2 percent two hours into the session.

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The tech-heavy Nasdaq composite index (up 1.05 to 2,646.00, Charts) hovered near breakeven, while the broader Standard & Poor's 500 index (down 2.01 to 1,522.86, Charts) lost 0.1 percent.

Stocks were higher Monday and Tuesday, ahead of the July 4 holiday. Financial markets were closed Wednesday for Independence Day. But all three major gauges turned lower in late morning trade Thursday as bond yields rose following a report that showed unexpected growth in the service sector.

"The market is grappling right now with what the [economic] numbers mean, and crude is up over $70," said John Wilson, chief technical strategist at Morgan Keegan.

"But overall we're looking at a pretty low volume day," he said.

The latest deal news came late Tuesday, when private equity firm Blackstone Group (up $0.91 to $30.63, Charts) said it was buying Hilton Hotels (up $9.45 to $45.50, Charts, Fortune 500) in a deal valued at $26 billion. Shares of the hotel chain jumped 26 percent, while rivals Marriott International (up $3.47 to $47.93, Charts, Fortune 500) and Starwood Hotels (up $4.88 to $74.01, Charts, Fortune 500) were also about 7 percent higher.

Jones Apparel Group (up $0.20 to $28.60, Charts, Fortune 500) said it received an unsolicited bid from Fast Retailing Co. (Charts) to acquire Barneys New York (Charts) for $900 million.

Private equity firm Apollo Management unveiled a $6 billion bid proposal for Huntsman Corp. (up $2.95 to $27.35, Charts, Fortune 500), sending shares of the the chemical company up 12 percent.

And Coca-Cola (down $0.14 to $52.76, Charts, Fortune 500) said Wednesday it is evaluating whether to make a bid for Snapple, the iced tea division owned by British drinks company Cadbury Schweppes (down $0.18 to $53.62, Charts).

In other corporate news, Kohlberg Kravis Roberts announced plans late Tuesday for a $1.25 billion initial public offering. The filing disclosed the high-profile firm has $53.4 billion in assets under management and earned $1.11 billion in 2006.

Shares of Research In Motion (Charts) rose over 2 percent on news that the Blackberry maker scored permission to sell its handheld devices in China.

General Motors (down $1.36 to $36.62, Charts, Fortune 500) was downgraded by Bear Stearns after the automaker reported a 21 percent drop in U.S. sales in June. The sales report, which came after the close of trading Tuesday, was much weaker than forecast. Shares of GM sank nearly 4 percent and was the biggest drag on the Dow.

Of the 30 stocks in the Dow, 22 fell and eight rose.

Market breadth was negative. On the New York Stock Exchange, losers edged out winners on volume of 500 million shares. On the Nasdaq, decliners beat advancers by a margin of five to four as 650 million shares changed hands.

On the economic front, the Institute for Supply Management's services index unexpectedly rose in June, beating forecasts for a modest decline.

And the number of initial claims for jobless aid filed last week increased by 2,000, according to the Labor Department.

But investors' focus may already be turned to the closely watched June jobs report slated for Friday.

Treasury prices fell in early trading, taking the yield on the 10-year note to 5.11 percent from 5.04 percent late Tuesday before the U.S. holiday.

The dollar rose against the euro and was higher versus the yen.

Oil prices seesawed after the EIA's report on U.S. fuel inventories. U.S. light crude rose six cents to $71.47 a barrel on the New York Mercantile Exchange.

In global markets, European stocks traded lower after the European Central Bank decided to hold interest rates steady and the Bank of England raised rates by a quarter percentage point to a six-year high of 5.75 percent.

Chinese stocks tumbled more than 5 percent on concerns about a flood of new shares, but other Asian markets ended the session higher. Top of page

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.