The Dow rose on Monday, buoyed by big consumer staples stocks as Wall Street turned defensive, while the broader market fell as Spain's rising bond yields fed worries about Europe's debt crisis and offset optimism over a jump in retail sales.
The Nasdaq slid, weighed down by a 3 percent drop in Apple Inc
Other major drags on the Nasdaq included a 9 percent slide in the shares of Mattel Inc
Spanish 10-year government bond yields climbed above the 6 percent mark on Monday for the first time since the beginning of December. Spain has acknowledged that it has probably slipped into its second recession since 2009.
Definitely when we focus on Europe, it's bad news, said Marc Pado, market strategist at DowBull.com in San Francisco. The austerity measures are too difficult to pull off so aggressively.
Pado said that worries over the growth outlook in Europe and China were a drag on economic performance. Some investors fear that those worries will drive a sharper retreat in stocks over the summer months, a weak period for equities.
Big defensive blue-chip stocks that investors see as a safe haven in a weak economy helped the Dow hang on to modest gains, although the blue-chip average was well off its session high at midday. Procter & Gamble
The Dow Jones industrial average <.DJI> gained 89.72 points, or 0.70 percent, to 12,939.31. The Standard & Poor's 500 Index <.SPX> added 0.38 of a point, or 0.03 percent, to 1,370.64. But the Nasdaq Composite Index <.IXIC> fell 21.58 points, or 0.72 percent, to 2,989.75.
Monday's mixed session followed last week's pullback, when both the Dow and the S&P 500 suffered their worst two-week percentage drops since late November on increasing concerns about the euro zone's debt crisis and weaker-than-expected economic data.
Before Monday's opening bell, Wall Street got some encouraging signs on both the economic and the earnings fronts.
Retail sales for March shot up 0.8 percent, the Commerce Department reported. The March reading far exceeded the consensus forecast for a gain of 0.3 percent.
Stocks initially bounced sharply at the open after retail sales rose more than expected in March, indicating economic growth in the first quarter did not soften as much as many had feared.
But the economic picture was not entirely upbeat as the New York Federal Reserve said the pace of manufacturing growth in New York state slowed sharply in April to its lowest level in five months.
Earnings season will pick up steam this week, with 86 S&P 500 companies scheduled to report results. According to Thomson Reuters data through Monday, of the 34 S&P 500 companies to have reported earnings so far, 76 percent have reported earnings above analyst expectations.
Mattel's quarterly profit fell short of analysts' expectations as price increases hurt sales of its iconic Barbie dolls and Hot Wheels cars, sending its stock down 9 percent at $31.07.
Baxter International Inc
Jury selection began on Monday in a high-stakes dispute over smartphone technology between Oracle
(Editing by Jan Paschal)