U.S. stocks were mixed 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.
"Our stock market has had a very meaningful move to the upside, at a 20% annual rate, and is arguably overvalued, especially if you consider the rise in bond yields," said Hugh Johnson, chairman of Johnson Illington Advisors.
A 1.4% surge in crude oil prices, which sent the price of a barrel over $66, also gave investors pause, he said.
The Dow Jones Industrial Average (DJI) fell 8 points to 13,660, with 18 of its 30 components retreating, led by Procter & Gamble Co. (NYSE:PG) (PG) , Merck (MRK) and General Motors Corp. (NYSE:GM) (GM) .
Bucking the trend among blue chips, Wal-Mart Stores Inc. (NYSE:WMT) (WMT) rose 2.9%.
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% after a Barron's (NYSE:DJ) article outlined the case for breaking up the juggernaut multinational.
The S&P 500 index (SPX) reversed early weakness to gain 0.8 points to 1,537, but the Nasdaq Composite (RIXF) eased 0.4 points to 2,613.
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.
Palm (PALM) jumped 8.8% after agreeing to sell 25% of the firm to a private- equity firm for $325 million.
Trading volumes showed 704 million shares exchanging hands on the New York Stock Exchange and 1.1 billion trading on the Nasdaq stock market. Advancing issues topped decliners by 8 to 7 on the NYSE, while decliners topped gainers by 8 to 7 on Nasdaq.
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%.
