MARKET SNAPSHOT: U.S. Stocks End With Dow Loss, Nasdaq Gain

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks closed a low-volume, light-news session with slight losses on Monday, though the technology-dominated Nasdaq Composite managed a gain.

The S&P 500 (SPX) edged down 1.95 points, or 0.1%, to 1,689.47 and the Dow Jones Industrial Average(DJI) dipped 5.83 points, or 0.04%, to end at 15,419.68.

But the Nasdaq Composite (RIXF) gained 9.84 points, or 0.3%, to 3,669.95. A nearly 3% gain by Apple Inc. (AAPL) provided a lift to the tech-heavy index, after a report over the weekend that the next iPhone will debut on Sept. 10. Investors also were digesting a price-target cut for Apple by Needham analysts.

The Dow had been down as much as 0.4% out of the gate. Last week, the blue-chip index lost 1.5% to snap a six-week winning streak, and the S&P 500 shed 1%.

On Monday, IT and telecom stocks were performing best among S&P sectors, as energy and utilities fared worst. Caterpillar Inc. (CAT) and Cisco Systems Inc.(CSCO) did best among Dow components, while Walt Disney Co.(CVX) was the biggest decliner.

A disappointing economic report from Japan accounted for the lower open, but then takeover talk helped stocks pare losses, said Kim Forrest, senior equity analyst at Fort Pitt Capital Group. She pointed to BlackBerry Ltd. (RIMM) saying it's considering a sale, alongside buyout speculation swirling around U.S. Steel Corp. (X)

"That's sort of making the rounds," Forrest told MarketWatch. "Gains in either are not driven by fundamentals."

BlackBerry, the struggling smartphone maker, surged nearly 11%, while U.S. Steel added 2.1%.

Forrest suggested stocks are somewhat stretched. Her team is focused on long-term, value investing, and it's sticking with a year-end price target of 1,625 for the S&P 500. "Stock prices have outperformed the actual results of the companies," she said.

Bruce Bittles, chief investment strategist at R.W. Baird, also views the stock market as somewhat extended.

"Over the very near term, we anticipate that the summer rally will resume and could carry into early September," he said in emailed comments Monday. "But the rise in stock values this summer has also introduced more risk in the market. Valuations are stretched."

He added that the strongest support for stocks continues to be Federal Reserve policy, but improving economic conditions are associated with a less stock-market-friendly Fed.

In Japan, the Nikkei 225 shed 0.7% on Monday on news the country's gross domestic product grew by 2.6% in the second quarter, missing forecasts for 3.6% growth.

"It's a big miss," said Fort Pitt's Forrest. "That's kind of a cautionary note to the bankers of the world who think they can fix their economies."

Other Asian markets gained ground on Wednesday. The Shanghai Composite and Hong Kong's Hang Seng Index finished 2.4% and 2.1% higher, respectively, after a report that Beijing was "quietly offering financial stimulus" to key cities and provinces to support the local economies.

European stocks closed slightly higher on Monday.

Gold futures rose after a major gold-oriented exchange-traded fund logged its first increase in holdings since June.

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