The benchmark large-cap indexes closed mixed today, in the lightest trading session of the year. The S&P 500 index eked out a gain of 0.13 points, or 0.01 per cent, to 1079.38, snapping a four-day losing streak.
The Dow Jones Industrial Average edged down 1.14 points, or 0.01 per cent, to 10,302.01, extending its run of losing sessions to five in a row. The Dow is down 3.7 per cent over the last five sessions.
Manufacturing giant 3M was the measure's worst performer, falling US58 cents, or 0.7 per cent, to $ US83.43 after the Federal Reserve Bank of New York's survey of manufacturing in the New York area showed weaker-than-expected growth.
Boeing also weakened, sliding US44c, or 0.7 per cent, to $ US64.40.
Technology companies gained today, boosted by excitement over computer giant Dell's acquisition of small-cap storage technology firm 3Par. Leading the Dow, Cisco Systems rose US55c, or 2.6 per cent, to $ US21.91. Intel gained US32c, or 1.7 per cent, to $ US19.47.
The technology-heavy Nasdaq Composite gained 8.39 points, or 0.39 per cent, to 2181.87, its first gain in five sessions.
Investors largely shrugged off the day's lacklustre reports on manufacturing, US homebuilders' index and Japan's gross domestic product.
"The market already knows the housing market is in dire straits," said Peter Cardillo, chief market economist at Avalon Partners. "Investors are just biding time, waiting for some of the heavy economic data later in the week."
Market watchers will also be scrutinising quarterly earnings reports tomorrow from retail giants Wal-Mart and Home Depot for clues about the strength of the consumer. Wal-Mart edged higher today, closing up a cent to $ US50.41. Home Depot advanced US7c, or 0.3 per cent, to $ US27.38.
Fellow home-retailer Lowe's gained US11c, or 0.6 per cent, to 19.70 after its fiscal second-quarter earnings increased 9.6 per cent, although sales disappointed. Lowe's maintained a cautious outlook for the current quarter and full year, citing uncertainty about consumers' moves from here, but several brokerage firms said results weren't as bad as feared.
In the bond markets, the US Treasury market posted a broad-based price rally today as investors sought safety in low-risk US government debt because of growing worries about the global economic outlook.
The 10-year note's yield, the benchmark for corporate and consumer borrowing, touched 2.570 per cent, the weakest level since March 2009. The 30-year bond's yield hit 2.719 per cent, the lowest level since April 2009.
In late New York trade, the benchmark 10-year note was 28/32 higher to yield 2.579 per cent, and the 30-year bond was 2 15/32 higher to yield 3.725 per cent. The two-year note was up 2/32 to yield 0.496 per cent, near a record low of 0.486 per cent hit on August 11. Bond prices move inversely to yields.
A slower-than-forecast gross domestic product report from Japan and a weaker-than-expected report on manufacturing in the New York region added to anxiety about the economic growth.
The Federal Reserve will begin buying Treasuries this week in a bid to prevent the economy from slipping back into recession, which also supports the bond market.
"The rally in Treasuries is still reflecting global growth concerns," said Dan Greenhaus, chief economic and bond strategist at Miller, Tabak & Co in New York. "With inflationary pressures in hibernation and the Fed maintaining a presence in the market, there is simply no reason to bet against this market right now."
Long-dated Treasuries led the gains, with the 30-year bond the market's best performer. A slowing economy reduces the fear of inflation, the main threat to bonds' fixed return, spurring many investors to grab extra yield in the long maturities as bond yields have fallen across the board.
The yield premium on the 10-year note over the two-year note shrank today to 208 basis points, the smallest since April 2009. It has steadily dropped over the past few months after hitting a record high of 292.9 basis points on February 18.
"There seems to be a flow-driven trade at work whereby investors are willing to move out on the Treasury curve in search of yield because the prevailing mind set is that rates will remain low at worst and perhaps drop even more from current levels," said Kevin Flanagan, fixed-income strategist for Morgan Stanley's individual-investor clients.
Bond yields have tumbled over the past few months as concerns have grown the US economic recovery could lose traction in the second half of the year, when most of the fiscal stimulus fades. Many investors are worried consumer spending will be sluggish given an elevated unemployment rate near 10 per cent.
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