Nasdaq gains, Dow wanes
Tech index rises as oil backs off records, but blue chips struggle on weak economic news. Financial shares up despite Lehman loss, AIG CEO shakeup.
NEW YORK (CNNMoney.com) -- Wall Street had a mixed day on Monday after weak economic reports revived recession fears and oil prices retreated from a new record near $140 a barrel.
The Dow Jones industrial average (INDU) fell 0.3%. The broader Standard & Poor's 500 (SPX) index was little changed and the Nasdaq composite (COMP) gained 0.8%.
Tuesday brings a slew of economic reports, including the May Producer Price Index (PPI), a measure of wholesale inflation, due out before the start of trade.
PPI is expected to have jumped 1% after rising 0.2% in April, according to Briefing.com forecasts. The so-called core PPI, which strips out volatile food and energy prices, is forecast to have climbed 0.2% after growing 0.2% in the previous month.
Other economic reports due Tuesday morning include May housing starts and building permits and readings on factory usage.
Additionally, earnings are due from Goldman Sachs (GS, Fortune 500), which has so far been able to avoid taking as large a hit from the credit crisis as its fellow banks.
Stocks struggled Monday morning as oil prices surged to a record trading high just short of $140 a barrel and investors mulled Lehman Brothers' huge quarterly loss and AIG's CEO shakeup.
But stocks recovered in the afternoon as oil erased most of its gains and strength in tech and financials continued to dominate.
"Oil is the real catalyst here, with higher energy prices making it difficult for the market to move higher and lower prices helping stocks to rise," said Dean Barber, president at Barber Financial Group.
U.S. light crude oil for July delivery fell 25 cents to settle at $134.61 a barrel on the New York Mercantile Exchange after hitting an all-time trading high of $139.89 earlier. Oil prices jumped on the weaker dollar and reports of a North Sea rig fire.
Reports that Saudi Arabia plans to boost oil production by 200,000 barrels per day had little impact on the price Monday. Analysts think that an extra 200,000 barrels per day would mostly be eaten up by international demand, leaving oil prices high.
Financial shares rallied despite negative news out of both Lehman Brothers and AIG.
"I think it's old news in terms of the problems in the financial sector," Barber said. "Besides, those stocks have literally just been battered and there isn't that much more room for them to fall."
Homebuilders confidence matches record low
The housing industry assessment index fell in June to match a record low set last December.
A report released Monday by the National Association of Home Builders (NAHB)/Wells Fargo said the housing market index fell 1 point to a seasonally adjusted reading of 18, down from May's reading of 19. A reading below 50 indicates that more builders think home sales conditions are poor than those who think the environment is positive for sales. (Full story).
Key manufacturing index slips
The N.Y. Empire State index, a regional manufacturing reading, fell to -8.7 from a prior reading of -3.2. Economists surveyed by Briefing.com thought it would improve to -2. Any reading that is positive implies expansion in the sector, while a negative reading implies further weakness.
Financial sector in focus
Lehman Brothers (LEH, Fortune 500) reported a roughly $2.8 billion quarterly loss, in line with a warning last week, after posting huge trading and hedging losses. The company recently announced a management shakeup and said it was raising $6 billion in capital to shore up its balance sheet. However, Lehman shares rallied as investors had expected the worst following the previous week's warning. (Full story).
AIG (AIG, Fortune 500) became the latest financial firm to announce a management shakeup as a result of steep losses stemming from the mortgage crisis. CEO Martin Sullivan is out and the company's chairman, Robert Willumstad, is in as chief executive. Willumstad will also hang on to the chairman job. (Full story)
Lehman Brothers rose 5.4%, leading the financial sector. Merrill Lynch (MER, Fortune 500) was up 2.5% and Morgan Stanley (MS, Fortune 500) gained 3%.
Other stock movers
AT&T (T, Fortune 500) and Verizon Communications (VZ, Fortune 500) were both downgraded to "neutral" from "buy" by brokerage UBS, according to published reports. Both stocks slipped.
JP Morgan cut its rating on GE (GE, Fortune 500) to "neutral" from "overweight," citing a rough environment for the company's business operations. GE (GE, Fortune 500) shares lost 0.6%.
In merger news, the proposed Sirius-XM Satellite deal has moved closer to completion. Nearly 16 months after the deal was first announced, the chairman of the Federal Communications Commission said the two satellite radio firms should be allowed to merge. Sirius shares gained 3% and XM shares rose 4%. (Full story).
Market breadth was positive. On the New York Stock Exchange, winners topped losers 3 to 2 on volume of 1.16 billion shares. On the Nasdaq, advancers beat decliners over 4 to 3 as 1.87 billion shares changed hands.
Other markets
In currency trading, the dollar fell versus the euro and gained against the yen.
COMEX gold for August delivery rose $13.20 to settle at $886.30 an ounce.
Corn prices have skyrocketed 11% in the past week as flooding soaks fields in the Midwest just before the crucial growing season. (For more on the floods and the economy, click here).
The national average price for a gallon of regular unleaded gas rose to a record high of $4.077, up from the previous day's record of $4.060, AAA reported.
In the bond market, Treasury prices fell, raising the yield on the benchmark 10-year note to 4.27% from 4.25% late Friday. Bond prices and yields move in opposite directions. 
