Wall Street Wanders; Bond Yields Slip

By CHRISTINE HAUSER

Wall Street exchanges wandered Monday on the heels of some mixed economic data as the yields on Treasury bonds continued to slip.

The home improvement retailer Lowe’s Companies said that its profit rose 10 percent in the second quarter, but it cut its revenue outlook, citing worries about the housing and labor markets. Lowe’s shares rose nearly 3.5 percent. Lowe’s rival, Home Depot, which reports earnings on Tuesday, rose 2.2 percent.

Also on Monday, Japan’s government reported that the gross domestic product was up 0.1 percent for the quarter, and a reading from the Fed Reserve’s manufacturing index for New York State showed an increase to 7.1 points in August from 5.0 in July. While both reports showed positive growth, they also fell below analyst expectations, serving as reminders that the pace of the global recovery was slowing.

While it did not appear that any single factor was directing market movement in morning trading, the reports from the United States suggested slowdowns in the retail and manufacturing, two sectors seen as crucial for the economic recovery.

Dan Greenhaus, the chief economic strategist for Miller, Tabak and Company, noted that new orders for manufacturers in the Fed’s Empire State index registered their first declines since June 2009, suggesting there could be a slowdown, although the negative picture was offset somewhat by a rise for the time being in the index’s employment data.

“As we have been arguing, the bulk of the manufacturing sector’s contribution is behind us and a move lower in these indices should be expected,” Mr. Greenhaus said in a research note. “That doesn’t make it welcome, but it should be expected.”

At the close, the Dow Jones industrial average, which went into the red for the year last week, was 1.14 points lower, and the broader Standard & Poor’s 500-stock index was 0.13 point higher. The Nasdaq composite index was 8.39 points, or 0.39 percent, higher. Volume remained light.

The Nasdaq got a lift from reports that the computer maker Dell would buy the data storage company 3PAR for $1.15 billion dollars. Dell shares were flat, but shares of 3PAR rose 86.42 percent.

Health care, energy and consumer staples stocks were among the sectors that traded lower early in the day.

European shares were also mixed. The FTSE 100 index in London settled higher by less than a point, while the CAC 40 in Paris fell 13.31 points, or 0.37 percent. The DAX in Frankfurt also rose by less than a point.

Bond prices continued to strengthen as yields dropped. The return on the benchmark 10-year Treasury note fell below 2.57 percent from 2.67 percent late Friday. The yields on the two-year and 30-year notes were also lower. “The bond market is really pricing in a not-very-good picture for the economy,” Andrew Neale, portfolio manager at Fogel Neale Partners in New York, said.

The Treasury Department said Monday that foreign holdings of federal securities rose $45.6 billion in June to $4 trillion.

Still, the agency said, China reduced its holdings of Treasury debt for a second month in June, falling by $24 billion to $843.7 billion, the Treasury Department said in its monthly report.

The stock market in the United States fell for four consecutive days last week, propelled lower by disappointing economic data and corporate earnings.

Equity traders faced a series of reports last week — business inventories, trade, retail sales and the Consumer Price Index — that were pointed to the possibility that second-quarter growth of 2.4 percent would be revised sharply lower. In addition, the Federal Reserve, in the statement of its meeting, also lowered its expectations for the rest of the year. That contributed to the Dow and the S.& P. declining by more than 3 percent for the week by last Friday, while the Nasdaq was down 5 percent.

Noting that the market was flat, Stephen Wood, the chief market strategist for Russell Investments, said: “Essentially you have got a tug of war between modestly positive and negative news.”

“You are really seeing a flurry of macroeconomic data,” he said. “I think essentially you are looking at a slightly positive environment. You don’t have a double-dip but neither do you have a brisk V-shaped recovery. And you are leveling out. The big issue right now is has the Federal Reserve stabilized the financial system? Did they arrest a cascading organ failure? And I think the answer is yes.”

He said there were uneven pockets of growth from a “mixed bag” of economic data, but the Federal Reserve was being “extremely accommodative.”

Keith B. Hembre, an investment strategist for First American Funds, said that now that the market has almost surpassed the bulk of earnings season, the prospects for “near-term positive data surprises on the macroeconomic front” were low.

“The broad theme is that the economy is clearly slowing and with that slowing it is going to be pretty difficult for equities to get some positive traction without signs of reacceleration on the horizon,” he said.