U.S. stocks dropped on Monday, as investors took news of another overnight stumble in the Shanghai stock market in stride, but cautiously monitored rising bond yields, which challenged the appeal of risk-taking in stocks.
The Dow Jones Industrial Average (DJI) fell 19 points to 13,649, with 22 of its 30 components retreating, led by Coca Cola Co. (NYSE:KO) (KO) , McDonald's Corp. (NYSE:MCD) (MCD) and Procter & Gamble Co. (NYSE:PG) (PG) .
Bucking the trend among blue chips, Wal-Mart Stores Inc. (NYSE:WMT) (WMT) rose 3%.
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.
And General Electric Co. (NYSE:GE) (GE) also rose 1.3% after a Barron's (NYSE:DJ) article outlined the case for breaking up the juggernaut multinational.
The S&P 500 index (SPX) fell 0.6 points to 1,535, while the Nasdaq Composite ( RIXF) eased 1.1 points to 2,612.
Deal-making news, including Flextronics International Ltd.'s (NASDAQ-NMS:FLEX) (FLEX) agreement to buy Solectron Corp. (NYSE:SLR) (SLR) for $3.6 billion, provided some support for tech shares and the broad market in early action.
And Palm (PALM) jumped 7.2% after agreeing to sell 25% of the firm to a private-equity firm for $325 million.
Blasé about Shanghai?
The mild dip in U.S. trading signaled 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 1/32 to 96 16/32, while its yield fell to 4.95% (TNX) , amid safe-haven buying from the Shanghai sell off.
Should U.S.
