US stocks were flat on Monday, erasing earlier gains, as oil prices jumped higher and shares of Morgan Stanley slid after its board decided to stand by its embattled chief executive. Morgan Stanley fell 6.9 percent to $49.02 after the investment bank's board met over the weekend and declined to oust its embattled chief executive as demanded by former high-ranking Morgan Stanley executives. Shares of the big brokerages fell after UBS lowered its outlook on the sector and downgraded Goldman Sachs Group Inc, Lehman Brothers Holdings Inc and Merrill Lynch & Co Inc to "neutral" from "buy."
The Dow Jones industrial average was up 3.70 points, or 0.04 percent, at 10,196.21. The Standard & Poor's 500 Index was down 1.25 points, or 0.11 percent, at 1,155.60. The technology-laced Nasdaq Composite Index down 4.10 points, or 0.21 percent, at 1,917.55.
Crude reversed an early decline and rose back above $50 a barrel, increasing concerns about the impact on corporate profits and consumer spending. NYMEX crude for June delivery was 68 cents higher at $50.40 a barrel on the New York Mercantile Exchange.
Investors were also cautious ahead of Tuesday's meeting by the Federal Reserve's policy-setting Federal Open Market Committee, headed by Fed chairman Alan Greenspan. Rates are expected to be increased again, although markets will focus more on the FOMC's accompanying statement for clues about future rate increases.
"People are sitting on the sidelines until tomorrow when Greenspan talks," said Mike O'Hare, head of listed trading at Lehman Brothers. "It's just lack of interest - or lack of participation because people are waiting for tomorrow."
In economic news, US manufacturing activity receded in April amid a drop in new orders and a deterioration in hiring, according to a report from the Institute for Supply Management, an industry group. But US construction spending jumped to a record high in March as home building also hit record levels, a government report showed.
American International Group Inc rose 5 percent to $53.67 after Wall Street welcomed the insurer's decision to restate financial reports. AIG said it will restate more than four years of reports because of accounting errors. Prudential Equity Group said in a research note that AIG's decision removed some uncertainty of the "status and strength" of AIG's balance sheet.
Home Depot Inc rose 2 percent to $36.05 after a positive note from a Smith Barney analyst, which said the home improvement retailer was "less vulnerable to macro and interest rate volatility."
Goldman Sachs was down 3 percent to $103.57, Lehman fell 4 percent to $87.91 and Merrill Lynch fell 2.8 percent to $52.41. UBS cited mixed economic signals over inflation and economic growth as reasons for the downgrade.
Comments
Comments are closed.