U.S. blue-chip stocks eked out a slim gain Monday but other market measures fell slightly as investors traded cautiously ahead of the first quarter corporate earnings season.
The Dow Jones Industrial Average closed up 1.06 points, or 0.01%, at 12381.11. The Nasdaq Composite shed 8.91, or 0.32%, to 2771.51. The Standard & Poor's 500-stock index slipped 3.71, or 0.28%, to 1324.46. The mixed activity came as investors looked ahead to the first-quarter earnings season, which kicked off unofficially Monday afternoon with Alcoa's report after the market close.
Shares of the aluminum giant fell 15 cents, or 0.8%, to $17.77, prior to the company's release. Alcoa swung to a first-quarter profit as it again posted higher aluminum prices and increased production, helping income from continuing operations reach its highest mark since the second quarter of 2008. Alcoa posted a profit of $308 million, or 27 cents a share, compared with a prior-year loss of $201 million, or 20 cents a share.
Revenue climbed 22% to $5.96 billion. The bottom line topped analysts' expectations, although sales growth wasn't as strong as Wall Street had expected. Analysts polled by Thomson Reuters expected a profit of 27 cents a share on revenue of $6.07 billion. The company's shares fell 1.9% in after-hours trading. Investors are generally expecting first-quarter earnings to come in strong, but they are concerned about the impact of rising food and energy prices.
European markets ended in negative territory Monday, with shares of car makers providing downward pressure after a broker downgrade. Bucking the trend, bank stocks traded higher in London, steadying the FTSE 100 index, as a government-appointed commission announced long-awaited reform proposals for the industry.
The Stoxx Europe 600 index fell 0.2% to close at 280.99, after gaining 0.6% last week. Earlier in the session, markets were rattled by news of a strong earthquake in northeastern Japan. European automotive stocks dropped after Credit Suisse downgraded the sector to benchmark from overweight, saying it's taking an increasingly cautious stance on cyclical stocks. The broker cut Daimler AG to neutral from outperform, saying the company needs structural reforms. Daimler fell 2.7%, while BMW AG dropped 2.5% and Volkswagen AG sank 1.4%, pushing the German DAX 30 index down 0.2% to close at 7,204.86. Shares of Deutsche Boerse AG rose 0.9% in Frankfurt, after the board of NYSE Euronext Inc. Sunday affirmed its commitment to a planned merger with the German exchange, rejecting a rival $11.3 billion offer from Nasdaq OMX Group Inc. and IntercontinentalExchange Inc.
Away from the main index, shares of Intercell AG fell nearly 27% after the company and Merck & Co. announced that a panel has recommended they suspend enrollment in a test of their vaccine to treat staphylococcus aureus infection. Autos also weighed on France's CAC 40 index, which lost 0.6% to finish at 4,038.70. Shares of Renault SA fell 2.2% and Peugeot SA lost 2%. Shares of Schneider Electric SA fell 3.7%, a top decliner in Paris after Bloomberg News reported that the company was mulling a purchase of manufacturing group Tyco International Ltd. Greece's ASE Composite Index dropped 2.6% to 1,491.83 after German Finance Minister Wolfgang Schaeuble reportedly said it's unclear if Greece will need more financial relief. Shares of Piraeus Bank SA shed 5%, Coca-Cola Hellenic Bottling Co.
SA fell 2.6% and National Bank of Greece SA declined 3.8%. Ireland's ISEQ index fell 1% to 2,936.88, with shares of Bank of Ireland dropped more than 9%. In London, the FTSE 100 ended virtually unchanged, slipping 2.31 points to close at 6,053.44. Banks took center stage, with shares of Barclays PLC up 2.8% and Royal Bank of Scotland Group PLC adding 2.3%, after the Independent Commission on Banking said that the U.K.'s biggest lenders should have a minimum equity capital ratio of 10% and that retail operations should be separated from riskier investment-banking arms.
Australian stocks ended at their highest level in nearly a year, with BHP Billiton leading miners after saying it wasn't aware of the basis for speculation it planned to buy Woodside Petroleum and offering updated details on a continuing share buy-back. Many other major markets declined, with Japanese stocks losing ground after data showed February's core machinery orders fell a sharper than expected 2.3% from the previous month.
The Nikkei Stock Average fell 0.5% to 9719.70, facing selling pressure after the benchmark jumped 1.8% on Friday to clinch gains for a third successive week. Sony dropped 1.5% and Sharp gave up 0.8% on news of suspended operations at domestic plants. Concern about delays to their production in the wake of the March 11 earthquake and tsunami pressured automobile stocks, with Toyota Motor and Nissan Motor falling 2.4% each, while Honda Motor gave up 2.2%. Shares in Tokyo Electric Power Co., the owner of the stricken Fukushima Daiichi nuclear plant, soared 19.1% after the Tokyo Stock Exchange temporarily imposed higher margin requirements to trade in the stock. South Korea's Kospi fell 0.3% to 2122.39, China's Shanghai Composite dropped 0.2% to 3022.75, Hong Kong's Hang Seng Index gave up 0.4% to 24303.07, Taiwan's Taiex shed 0.2% to 8880.27 and India's Sensex fell 1% to 19262.54. Energy shares posted gains as crude-oil prices briefly went above $113 a barrel.
Shares of PetroChina gained 2.8% in Hong Kong and 0.1% in Shanghai and Inpex Corp. rallied 3% in Tokyo. The high crude-oil price also raised hopes for higher prices for other fuels, spurring buying in regional coal miners. Coal India Ltd. gained 0.5% in Mumbai, while China Shenhua Energy Co. and China Coal Energy Co. rose 0.7% and 0.8%respectively in Hong Kong; the companies' Shanghai-listed shares added 3.2% and 0.8%, respectively.
Base metals closed mixed on the London Metal Exchange Monday after struggling to find a clear direction, with a modest rise in the dollar and a lack of enthusiasm over Chinese trade figures keeping the markets largely within range. LME three month copper closed the session at $9,855 a metric ton, down 0.2% on Friday's PM kerb close.
Oil futures tumbled Monday, falling back below $110 a barrel as traders grow concerned that rising prices are beginning to weigh on demand. Light, sweet crude for May delivery settled $2.87, or 2.5%, lower at $109.92 a barrel on the New York Mercantile Exchange after hitting a fresh multiyear high of $113.46 earlier in the session.
Brent crude on the ICE futures exchange dropped $2.63 to $124.02 a barrel. The sharp rise in oil prices last week has investors rethinking whether demand is sustainable amid a global economy still in recovery. The International Monetary Fund on Monday said global economic growth will slow to 4.4% this year, with high oil prices and a spread of Europe's sovereign debt crisis threatening the recovery. The IMF's 2011 U.S. growth forecast was revised down to 2.8%.
Gold futures retreated on a calmer geopolitical outlook amid cease-fire efforts in the Middle East and a compromise over the U.S. Federal budget. The most actively traded contract, for June delivery, settled down 0.4%, or $6, at $1,468.10 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract had set a fresh all-time high overnight, reaching $1,478 a troy ounce. The April-delivery contract was down 0.4%, or $6, at $1,467.40 a troy ounce.
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