NEW YORK (AP) — The stock market was able to recover from steep losses to close slightly lower on Monday as investors looked past another steep drop in the price of oil and renewed concerns about economic growth in China and the U.S. Oil and gas companies remained in the red.
The fact that utility and other high-dividend stocks were among the better performers should be seen as a sign that investors still don't have much conviction behind last week's gains and Monday's recovery, traders said.
The Dow Jones industrial average fell 17.12 points, or 0.1 percent, to 16,449.18 after being down roughly 150 points earlier in the day. The Standard & Poor's 500 index fell 0.86 points, less than 0.1 percent, to 1,939.38 and the Nasdaq composite rose 6.41 points, or 0.1 percent, to 4,620.37.
Stocks had been lower most of the day after separate reports showed manufacturing slowing last month in both the U.S. and China. The reports initially caused a sell-off in commodities, notably energy and industrial metals like copper. The price of U.S. benchmark oil plunged $2, or 5.9 percent, to $31.62 a barrel in New York. Natural gas also fell about 6 percent.
But as the trading day drew to a close, investors began to buy up utilities and other dividend-paying stocks. The Dow Jones utility index, a collection of 15 utility companies, rose nearly 1 percent on Monday. Telecommunications stocks, another traditional dividend play, posted the second-biggest gains in the S&P 500.
J.J. Kinahan, chief strategist at TD Ameritrade, said part of the reason dividend stocks did better than the rest of the market was speculation that the Federal Reserve, faced with a more uncertain economic environment, would likely not raise interest rates as fast as investors had thought at the beginning of the year.
Dividend stocks perform poorly in a rising interest rate environment, because the value of the yield on dividend stocks gets worn away as yields rise on bonds and other dividend-paying investments.
"We're looking at probably only two (interest rate) raises this year instead of four, and that makes dividend stocks look relatively attractive again," Kinahan said.
Energy stocks, not surprisingly, were the biggest losers on Monday, following the price of oil lower. The energy component of the S&P 500 fell nearly 2 percent, versus the nearly flat performance of the broader market.
Southwestern Energy declined 39 cents, or 4.4 percent, to $8.50, Transocean dropped 63 cents, or 6 percent, to $9.79 and Chesapeake Energy fell 18 cents, or 5 percent, to $3.21.
In other company news, Alere jumped $16.91, or 46 percent, to $54.11 after Abbott Laboratories announced it was purchasing the health care company, which is focused on diagnostics, for $5.8 billion. Abbott Labs shares rose 60 cents, or 2 percent, to $38.45.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 1.95 percent. The dollar fell to 121.02 yen from 121.10 yen on Friday. The euro strengthened to $1.0893 from $1.0829.
Prices for precious and industrial metals closed mixed. Gold rose $11.50 to $1,127.90 an ounce, silver gained 10 cents to $14.34 an ounce and copper slipped a penny to $2.06 a pound.
In other energy trading, wholesale gasoline lost 4.9 cents to $$1.083 a gallon, heating oil fell 4.2 cents to $1.037 a gallon and natural gas plunged 14.6 cents to $2.152 per 1,000 cubic feet. In London, Brent crude fell $1.75 to $34.24 a barrel.