U.S. stocks opened lower on Monday, with Wall Street once again taking its cues from an overnight stumble in the Shanghai stock market, while rising bond yields also challenged the appeal of risk-taking in stocks.
The Dow Jones Industrial Average (DJI) fell 22 points to 13,645.
Among blue chips, Wal-Mart Stores Inc. (NYSE:WMT) (WMT) rose 2.8%.
The stock was upgraded by JP Morgan, HSBC, Wachovia and Morgan Stanley following the retail giant's shareholder meeting, where it revealed plans to cut capital spending and return more cash to shareholders.
The S&P 500 index (SPX) fell 0.9 points to 1,535, while the Nasdaq Composite ( RIXF) dipped 1.5 points to 2,612.
Deal-making news, including Flextronics International Ltd.'s (NASDAQ-NMS:FLEX) (FLEX) deal to buy Solectron [s: slr] for $3.6 billion, provided some support for the market in early action.
Blasé about Shanghai?
The mild dip at the open of U.S. trading might signal that investors aren't overly worried about yet another stumble in the Shanghai stock market. In spite of an 8% battering in Shanghai, other Asian markets recovered, including the Hang Seng in Hong Kong and the Nikkei in Tokyo.
A tumble in the Chinese stock market last week was followed by rally on Wall Street the next day. When Shanghai fell sharply in late February, the Dow industrials had plunged 416 points.
But since then, U.S. stocks have staged an impressive rally. Through May alone, the Dow gained 4.3%, the S&P advanced 3.2% and the Nasdaq gained 3.1%.
Bond yields rising
Last week, a slew of better-than-expected data, including the May employment report, boosted confidence in the economy and helped the Dow gain 1.2%, the S&P 1.4% and the Nasdaq 2.2%.
Yet, strong data also pressured bond prices, pushing their yields, which move inversely to price, much higher. The yield on the benchmark 10-year Treasury bond surpassed 5%, its highest level since mid-August.
On Monday, the 10-year bond rose 3/32 to 96 18/32, while its yield fell to 4.96% (TNX) , amid safe-haven buying from the Shanghai sell off.
Should U.S. stocks finally halt their impressive rally this week, "it will either be that investors turn their attention to rocketing interest rates or it will have to come from Wednesday's economic release on productivity and unit labor costs," said Marc Pado, market strategist at Cantor Fitzgerald.
After a Thursday and Friday chock full of economic data, only factory orders for May are on Monday's docket, due out at 10 a.m. eastern time.
Ahead of the data, the dollar was weaker against rivals. Crude oil prices and gold fell.
Deals to the rescue?
More deal-making developments might help the bulls push the market further into record territory later in the session.
