The Dow industrials and the S&P 500 edged up on Monday as higher oil prices lifted energy shares, but financial companies' outlook kept investors cautious and overshadowed news of a $4.4 billion takeover in the agricultural sector.
Exxon Mobil Corp shares led the Dow and the S&P 500 advancers with a gain of 2.2 percent to $86.72. US front-month crude rose $2.49 to $137.85 a barrel, lifted by supply snags, a strike threat in Nigeria and an output boost by Saudi Arabia seen as too little to limit soaring prices.
Financial shares weighed on both the Dow and the S&P after Goldman Sachs recommended that its clients sell the sector as well as consumer discretionary stocks due to economic concerns.
Insurer American International Group was the top drag on the Dow, with AIG shares down 4.5 percent after Barron's newspaper said the stock "will likely be dead money for some time to come," citing the potential for more accounting woes ahead. The continued weakness in financial stocks, said Michael James, senior trader at Wedbush Morgan in Los Angeles, is due to "the fear that there is more negative news to come from financials."
The Dow Jones industrial average gained 8.38 points, or 0.07 percent, to 11,851.07. The Standard & Poor's 500 Index added 1.43 points, or 0.11 percent, to 1,319.36. But the Nasdaq Composite Index declined 8.89 points, or 0.37 percent, to 2,397.20.
Shares of Bank of America Corp and J.P. Morgan Chase & Co slid nearly 3 percent. The S&P financial index fell more than 2 percent. Shares of Citigroup fell more than 3 percent. AIG shares declined to $30.69 on the New York Stock Exchange, while Bank of America's stock declined to $26.37, J.P. Morgan shares dropped to $36.82 and Citigroup's shares fell to $18.67.
Reflecting the impact of the mortgage crisis on the financial sector, Citigroup Inc plans to cut thousands of trading and investment banking jobs this week, a person familiar with the situation said on Monday. The cuts are part of previously reported plans to slash about 10 percent of Citi's investment bank division. Corn Products shares jumped 18.1 percent to $50.69 on the NYSE, while Bunge shares sank 10.6 percent to $109.24.