US stocks were little changed on Monday as financial shares retreated, while data pointing to a manufacturing slowdown fuelled caution about the economy's health, offsetting optimism about a plan to stem mortgage defaults.
Treasury Secretary Henry Paulson said a subprime mortgage relief plan was near completion, bringing some relief to a market jittery about the impact of the housing slump on economic growth and profits.
Shares of home builders were among advancers, but those of financial services companies, including Bank of America Corp, the No 2 US bank, weighed on the broader market, along with big manufacturers such as General Electric.
Energy shares also declined along with crude oil prices.
Industrial companies also dragged on the market after the Institute for Supply Management said its index showed factory activity in November fell to its lowest since January.
"The primary trend of the market, in our opinion, still remains moderately higher. The main thing that the market is doing is just trying to consolidate some of the gains of last week," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
"Overall, we think economic growth has slowed, but we think the risk of a recession has been substantially reduced, thanks to a very friendly Fed." The Dow Jones industrial average was down 4.47 points, or 0.04 percent, at 13,367.25. The Standard & Poor's 500 Index was down 4.06 points, or 0.27 percent, at 1,477.08. The Nasdaq Composite Index was down 1.02 points, or 0.04 percent, at 2,659.94.
Paulson said his department was close to working out a plan with the mortgage industry to move many troubled subprime borrowers into more sustainable home loans. Separately, he told Bloomberg Television in an interview: "I am optimistic that we're going to have something to announce before the end of the week."
Shares of Centex Corp, the fourth-largest US home builder, jumped 5.1 percent to $21.93 on the New York Stock Exchange, while shares of Lennar Corp, the No 2 US home builder, climbed 5.1 percent to $16.65 on the NYSE. The Dow Jones US home construction index climbed 2.4 percent, but the S&P financial index slipped 0.8 percent.
Shares of American International Group Inc led financial stocks lower in both the Dow and the S&P 500, with the shares of the world's largest insurer by market value falling 1.5 percent to $57.19 on the NYSE.
Bank of America shares slipped 0.8 percent to $45.77. Bank stocks were last week's biggest gainers as they rebounded on hopes of further cuts in interest rates. Shares of Fannie Mae, the top US housing finance source, slid 5 percent to $36.50 on the NYSE after Goldman Sachs cut its price target on the stock.
Declining shares of large manufacturers included General Electric and General Motors. GE was down 3 percent at $37.14 and GM was down 2.8 percent at $29.
Bear Stearns cut estimates of earnings per share on companies in the S&P 500 in 2007 and 2008, but lifted its forecast for the health-care sector, seen faring better in slowing economy. On the Nasdaq, shares of Research in Motion fell 6.3 percent to $106.64 after Morgan Keegan cut its rating on the BlackBerry maker.
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