Stocks mixed as lift from tax cuts fades
Stocks turned mixed Monday after three straight weeks of gains as upward momentum driven by a freshly signed tax cut package faded.
Major indexes were mostly lower in early afternoon trading, giving up earlier gains. They had edged higher last week as the tax deal moved its way through Congress. The package, which President Barack Obama signed into law on Friday, is expected to boost economic growth. Critics say it could also increase the size of the budget deficit and lead to higher inflation.
American Express Co. led the Dow Jones industrial average lower. The stock fell 4.3 percent after a Stifel Nicolaus analyst downgraded the company. AT&T Inc. fell 0.6 percent after the company said it would buy $1.92 billion worth of broadcast spectrum from Qualcomm Inc. to ramp up its high-speed cell phone network.
Medtronic Inc. rose 1.2 percent after the world's largest medical device manufacturer said its chairman and CEO will step down in April after leading the company for three years.
Boeing Inc. fell 2.8 percent even as the company said it was increasing the production rate for its 777 aircraft again in response to strong demand. Last week, the aerospace giant said that customers canceled orders for three 777s and one of its 787s.
The Dow Jones industrial average fell 29.14, or 0.3 percent, to 11,462.77 in afternoon trading. The Standard & Poor's 500 index rose less than a point to 1,244.55. The index is 7 points below its closing level on Sept. 12, 2008, the last trading day before the collapse of Lehman Bros. The Nasdaq composite index rose 1.58, or 0.1 percent, to 2,644.55.
Stocks have been rising strongly in December. The Dow 30 gained 400 points, or 3.6 percent, over the last three weeks and the S&P 500 has hit seven new 2010 highs since Dec. 8. Investors have been encouraged by mostly upbeat economic data on retail sales, consumer confidence and factory production.
"The markets ... made quite a run," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. But the tax cuts "can only go so far," Carl said, and are unlikely to continue sending stocks higher.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.28 percent from 3.33 percent late Friday. Yields had been on the rise in the last few weeks after investors pulled money out of bonds, expecting the tax-cut plan to help the economy.
The dollar rose 0.2 percent against an index of six other currencies.
Darden Restaurants Inc., which operates the Olive Garden and Red Lobster chains, reports its results after the stock market closes Monday. Investors want to know if sales at restaurants open at least a year can keep rising. Software company Adobe Systems Inc. also reports its results, providing insights into technology spending by businesses and consumers.
Later in the week, investors will get reports from shoe maker Nike Inc., used car dealership chain CarMax Inc. and pharmacy operator Walgreen Co.
Markets will be closed on Friday in observance of Christmas.