Stocks pare losses after Paulson comments
EmptyNEW YORK -- Stocks pared early losses to trade narrowly mixed Monday after Treasury Secretary Henry Paulson said he is confident an agreement will soon emerge to help thousands of homeowners avoid mortgage defaults by temporarily holding their interest rates steady.
The stock market's modest fluctuations follow a week in which the Dow Jones industrial average showed its biggest weekly point gain in more than four years, rising nearly 391 points, or 3.01%.
In addition to Paulson's comments before a national housing conference, the Institute for Supply Management said the pace of growth in the manufacturing sector slowed in November, though not as quickly as had been expected.
In midmorning trading, the Dow Jones industrial average rose 8.37, or 0.06%, to 13,380.09.
Broader stock indicators fell. The Standard & Poor's 500 index slipped 3.71, or 0.25%, to 1,477.43, and the Nasdaq composite index fell 1.20, or 0.05%, to 2,659.76.
The market's search for direction Monday comes after a week in which comments from Federal Reserve officials buoyed investors' hopes that the central bank would lower short-term interest rates when it meets next week. Despite a strong week and some renewed optimism, the Dow nevertheless lost 4% in November.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.91% from 3.94% late Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 48 cents to $88.23 per barrel on the New York Mercantile Exchange amid speculation that OPEC may boost output at its meeting this week even after a sharp drop in prices last week.
In economic news, the manufacturing index from the Institute for Supply Management, a trade group of purchasing executives, came in at 50.8, down from 50.9 in October. A reading above 50 signals expansion in the sector, while a number below 50 indicates contraction.
Analysts polled by Thomson/IFR Markets predicted a reading of 50.1.
Investors are awaiting the important November employment report, which is due Friday. Wall Street regards consumer spending as crucial to maintaining economic growth, particularly during what is for many retailers the busiest time of the year.
In the meantime, Wall Street will be looking for other signals about how the economy will fare, including the housing sector.
Paulson said the plan to freeze some interest rates is part of a "pragmatic response" to reality as the economy faces the worst housing pullback in more than 20 years.
In corporate news, Vivendi SA said it plans to acquire a controlling stake in Activision Inc. to combine it with Vivendi Games and create a rival to Electronic Arts Inc. Activision and Vivendi valued the combined company at $18.9 billion. Activision jumped $3.78, or 17.1%, to $25.93.
MetLife Inc., the insurance and financial services company, predicted its operating profit will rise in the fourth quarter and full year due to strong results from its business as well as "unusually strong" investment results. MetLife fell $1.48, or 2.3%, to $64.11.
Overseas, Japan's Nikkei stock average rose 0.33%, while Hong Kong's Hang Seng index rose 0.05%. In afternoon trading, Britain's FTSE 100 fell 0.74%, Germany's DAX index fell 0.30%, and France's CAC-40 fell 0.72%.