US stocks struggle to push higher after mixed economic data

New York (May 2)  US stocks struggled to make substantial headway Monday after a mixed bag of manufacturing and construction data showed slow but steady growth in the U.S. economy after a disappointing first quarter.

The data sparked some appetite for assets, such as equities, that are perceived as risky ahead of April U.S. jobs data due Friday, after disappointing earnings and a weak report on first-quarter economic growth last week led the main three indexes to post weekly losses.

The S&P 500 SPX, +0.40%  was up 5 points, or 0.3%, at 2,070, led by gains in consumer-discretionary and financial stocks, both up 0.7%.

The Dow Jones Industrial Average DJIA, +0.42% gained 55 points, or 0.3%, to 17,827, led by sharp gains in McDonald’s Corp. MCD, +1.36%  and Goldman Sachs Group Inc. GS, +1.77% both up 1.1%.

Meanwhile, the Nasdaq Composite COMP, +0.20%  was dipping in and out of positive territory, as Apple’s AAPL, -0.74%  eighth-straight session loss—the longest in 18 years—weighed on the tech-heavy index, last down less than 0.1% to 4,774.

The Institute for Supply Management said its manufacturing index fell to 50.8% last month from 51.8% in March. Despite the weaker-than-expected results, readings over 50% indicate more companies are expanding instead of shrinking. Meanwhile, construction spending rose in March, thanks to a jump in residential building.

The modest drop in the ISM index “is a bit disappointing, but that April figure is still the second highest reading in the past eight months,” said Paul Ashworth, chief U.S. economist at Capital Economics, in emailed comments.

Bottom line, with the dollar continuing to reverse its massive appreciation from last year and global economic growth rebounding, the headwinds facing U.S. manufacturers should fade over the coming months, Ashworth said.

The news pushed the benchmark 10-year Treasury yield higher TMUBMUSD10Y, +0.82% which favored financial stocks, as higher yields are typically considered to improve bank profitability, said Quincy Krosby, market strategist at Prudential Financial.

But in a broader sense, as the stock market is coming out of a mixed performance in April, what investors want to see right now is “an indication of some strength building,” Krosby said.

The Dow industrials and the S&P 500 closed out April with gains of 0.5% and 0.3%, respectively, but the Nasdaq slid 1.9% due to weaker-than-expected earnings from Apple Inc. AAPL, -0.74% and Intel Corp. INTC, +0.58%

This week could be critical, according to Krosby, because a potential deterioration in the series of data ahead would cause a “resurrection of the bull-bear debate that dominated the market at the beginning of the year and that would be a negative for the market,” she said.

On the flip side, should the data along with a flurry of second-tier earnings reports surprise positively, the S&P 500 and the Dow industrials can push higher to all-time records fueled by a nascent transition from momentum to value stocks, said Kent Engelke, chief economic strategist at Capitol Securities Management Inc.

Other markets: Oil futures CLM6, -2.26%  were under pressure on Monday, as traders cashed out of a fast run up in prices in April, pulling down the stocks of energy companies. The energy sector was down 0.4%, the worst performer on the S&P 500.

Meanwhile, the dollar USDJPY, +0.00%  tapped a fresh 18-month low against the yen overnight. Gains for the yen crushed the Nikkei 225 index NIK, -3.11% which closed down 3.1%. Most Asian markets were shut for holidays. European stocks SXXP, -0.07%  were mixed in the absence of London markets, also shut for a holiday.

Gold prices GCM6, +0.55%  continued to rise after closing new highs for the year on Friday.

Stocks to watch: Baker Hughes BHI, -3.85%  said it would use the $3.5 billion breakup fee it will get from Halliburton  HAL, +2.25%  after their merger was called off to buy back $1.5 billion of its stock and pay down $1 billion in debt. Baker Hughes shares were down 0.6% and Halliburton was up 1.8%.

Apple Inc. AAPL, -0.74%  dropped 1%, on track for its eighth straight loss—its longest losing streak in 18 years—after industry tracker IDC said world-wide shipments of tablets fell another 15% during the first quarter of the year as “overall disinterest” for the product hit record highs.

Read: Wall Street isn’t rewarding low-expectation earnings beats AMZN, +2.52% was up 2.5% after billionaire investor Warren Buffett said at a Berkshire Hathaway shareholder meeting on Saturday that the company’s accomplishments in a short time have been remarkable.

Berkshire Hathaway BRK.B, +0.71% BRK.A, +0.37%  inched higher by 0.5% after posting a rise in earnings on Saturday despite profit falls for railroads, utility and energy segments.

Source: MarketWatch