Dow ends in the black

Wall Street erases bigger losses by the close, as select blue-chip gains counter lower oil prices and economic pessimism.

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By Alexandra Twin, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Stocks cut losses, ending mixed Monday, as worries about the duration of the recession were tempered by a rally in select blue chips.

The Dow Jones industrial average (INDU) gained 44 points, or 0.5%. The S&P 500 (SPX) index rose 2 points, or 0.3% and the Nasdaq (COMP) fell 9 points, or 0.5%.

Stocks slipped through the early afternoon as investors eyed falling oil prices and a better-than-expected report on the services sector of the economy from the Institute for Supply Management. But a late-session run up in biotechs and consumer issues helped the Dow turn positive.

"With a bounce in the U.S. dollar, money moved out of the volatile commodity area and into more defensive areas like consumer staples," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

Stocks slipped Thursday in the last session of a holiday-shortened trading week after a weaker-than-expected jobs report fueled worries about the economy. All financial markets were closed Friday for the Independence Day weekend.

Monday's trading was partly a continued response to Thursday's job report, said Paul Brigandi, vice president of trading at Direxion Funds.

"People are in 'show me' mode," he said. "They want to see hard evidence that the recession is going to end later this year or early next. That jobs report was an indication that the recovery is a little further off than what people expect."

Stocks rallied for three months, with the S&P 500 gaining 40%, on bets that the economy is closer to stabilizing. But stocks have drifted lower in the last three weeks on concerns that the run-up was too much, too soon.

There are no market-moving economic reports on tap for Tuesday.

On the move: Commodity, homebuilding, technology and retail shares were among the big decliners Monday.

On the Dow industrials, Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) led the declines, falling along with the price of oil. But that was countered by strength in heavily-weighted components such as Johnson & Johnson (JNJ, Fortune 500), Merck (MRK, Fortune 500) and Procter & Gamble (PG, Fortune 500).

Financial shares Travelers (TRV, Fortune 500), American Express (AXP, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) gained as well.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.14 billion shares. On the Nasdaq, decliners topped advancers by eight to five on volume of 2 billion shares.

GM: General Motors' (GMGMQ) restructuring plan has been approved by a federal judge, clearing the way for the troubled automaker to emerge from bankruptcy.

The automaker will be allowed to sell most of its assets to a new company, which should clear the way for it to exit bankruptcy. The judge's ruling came after a three-day hearing ended Thursday.

The company has received $50 billion in taxpayer funds. In exchange, the U.S. government will get a majority stake in the new GM. Other owners include the Canadian government and the United Auto Workers union.

GM shares fell 14.4%.

Other company news: Pepsi (PEP, Fortune 500) and Pepsi Bottling Group (PBG, Fortune 500) will invest an additional $1 billion in Russia over the next three years in an effort to counter weak domestic sales by boosting profits in emerging markets. The two companies have now invested more than $4 billion in Russia.

Rio Tinto (RTP) sold a division of its Alcan unit for $1.2 billion as it seeks to cut debt after the 2007 purchase of the Canadian aluminum company. The sale of Alcan's packaged food division to U.S.-based Bemis is a cash-and-stock deal.

Oil: Energy prices tumbled, with U.S. light crude oil for August delivery falling $2.68 to settle at $64.05 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rose, lowering the benchmark 10-year note yield to 3.51% from 3.49% late Thursday. Bond markets were closed Friday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian markets tumbled and European markets ended lower.

In currency trading, the dollar gained versus the euro and the yen.

COMEX gold for August delivery settled down $6.70 at $924.30 an ounce.

Economic reports: The Institute for Supply Management's services index rose to 47 in June from 44 in May, which still indicated a contracting sector. Economists surveyed by Briefing.com thought it would rise to 46. To top of page

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