A rally in US stocks evaporated in thin trading on Monday as a downgrade to Greece's debt rating served as a reminder of Europe's debt issues.
DuPont was among the decliners, in addition to big banks JP Morgan Chase and Bank of America, which were hit with worries about their exposures to European banks.
The Dow Jones Industrial Average declined 20.18 points (0.20%) to 10,190.89, snapping a two-day winning streak. JP Morgan was the measure's worst performer with a drop of 76 cents (2%) to $37.33. Bank of America fell 19 cents (1.2%) to $15.41. Data released on Sunday underscored European banks' exposure to the most debt-strapped countries, and investors are concerned about how US banks could be affected by their exposures to European banks.
DuPont was also weak, with a drop of 75 cents (2%) to $36.86, and General Electric declined 17 cents (1.1%) to $15.39.
The Nasdaq Composite eked out a gain of 0.36 (0.02%) to 2,243.96. The Standard & Poor's 500 index slipped 1.97 (0.18%) to 1,089.63.
The declines came as Moody's Investors Service cut Greece's government-bond ratings by four notches to Ba1, which is a junk-grade rating. Traders said the move wasn't a surprise, but it helped remind the market of the troubles in the euro zone on a day when investors had been feeling better about the region thanks to a better-than-expected report on industrial production there.
Industrial production in the euro-zone rose 0.8% in April, gaining 9.5% from a year earlier, the sharpest year-on-year increase since records began in January 1990.
Lincoln National rose $1.05 (4%) to $27.41, after the insurer, which got a US bailout, said it will repay the government with a planned sale of $335m in stock and $750m in debt. That is ahead of the schedule Chief Executive Dennis Glass had first announced when he predicted Lincoln could repay by the end of 2010.
Marsh & McLennan climbed 77 cents (3.5%) to $22.85. A unit of the insurance conglomerate settled a $2.8bn lawsuit with the state of Alaska for a $500m payment, alleviating a concern for investors and further clearing up the picture for Marsh.
Cablevision Systems jumped $1.17 (5%) to $24.57, after the cable provider confirmed its acquisition of Bresnan Communications for $1.37bn, and said it authorised $500m for share repurchases in an effort to assuage shareholders' concerns about the deal.
American depositary shares of BP PLC fell $3.30 (9.7%) to $30.67, on more concerns about the extent of the oil giant's liabilities as it struggles to contain the massive oil spill in the Gulf of Mexico. The action came as US Senate Majority Leader Harry Reid (D., Nev.) and members of the Democratic caucus asked BP to set aside $20bn in a special account to be used to pay for economic damages and clean-up costs of the spill in the Gulf Coast.
The letter comes as US President Barack Obama is preparing to ask BP to set up an independently administered fund for reimbursing victims.
For Australian ADRs listed on the NYSE, BHP Billiton improved 58 cents (0.89%) to US$65.86, Rio Tinto Plc climbed 70 cents (1.48%) to US$47.99, ResMed firmed 74 cents (1.15%) to US$65.12, Telstra Corporation strengthened 29 cents (2.16%) to US$13.74, Telecom Corporation of NZ gained 11 cents (1.69%) to US$6.62 and Westpac advanced 61 cents (0.61%) to US$100.17.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.25% and the five year yield was 2.03%.
European shares gained on Monday as sentiment toward the global economy improved and as several companies flagged that they're in deal talks.
Starting a fourth straight week of gains, the Stoxx Europe 600 index rose 1.2% to 252.54.
Shares notably contributing to the advance included industrial conglomerate Siemens, up 4%, and mining giant Rio Tinto, up 3%. These firms are leveraged to economic growth trends.
Overnight in Japan, James Bullard, president of the Federal Reserve Bank of St. Louis, said the global recovery at this point looks very strong.
Data was also supportive for European equities, with euro-zone industrial production for April higher by 0.8% on a month-on-month basis and by 9.5% on a year-on-year basis.
At the regional level, the French CAC-40 index advanced 2% to 3,626.04, the German DAX index added 1.3% to 6,125.00. The UK's FTSE 100 index lagged among the three, up 0.7% to 5,202.13.
Deal news also helped selected firms to gain in Europe, with shares of French insurance giant Axa up 3.7% after the UK's Resolution Ltd. said that it's in talks over the potential acquisition of the majority of Axa's UK life-assurance business. The total price would be GBP2.75bn, which would be partially funded by a GBP2bn rights issue. Resolution shares were suspended in London.
Also higher, shares of Societe Generale rose 3.9% after the French bank said that its Credit du Nord arm is in exclusive talks to buy Societe Marseillaise from mutual bank BPCE for EUR872m.
United Utilities, up 0.9%, announced that it will sell its principal non-regulated water interests in the UK and Europe to Veolia Water, a unit of French-headquartered Veolia, for GBP174.2m. Veolia's shares gained 1.7%.
Asian shares finished higher as an improvement in US consumer sentiment helped provide support for many of the region's exporters, including auto makers and technology companies in Japan.
Japan's Nikkei Stock Average closed up 1.8% while Hong Kong's Hang Seng Index ended 0.9% higher.
New Zealand shares ended flat in a lacklustre market on a dearth of local news and a lack of offshore impetus due to the Australian market being shut for a public holiday. The NZX-50 Index closed up 0.1%, or 1.40 points, at 3,042.67, shrugging off the 0.4% rise on Wall Street on Friday.
Base metals on the London Metal Exchange posted some of their biggest gains in weeks on better-than-expected euro-zone economic data and a rallying euro. Aluminium rose $45 (2.32%) to $1,985 while copper firmed $170 (2.63%) to $6,630 and nickel added $635 (3.26%) to $20,135. Zinc strengthened $60 (3.45%) to $1,800 and lead gained $30 (1.79%) to $1,710. Comex copper was last quoted at 297.30 US cents per pound.
Gold fell, after losing some of its recent safe-haven lustre as equities and the euro rallied after stronger economic data in Europe. Spot gold was last quoted at $1,221.60. Comex gold futures dropped $5.70 (0.46%) to $1,224.50. Spot silver was last quoted at $18.17.
Crude rose as strength in equities and the euro bolstered investors' confidence in an economic recovery, despite a downgrade of Greece's debt rating. West Texas Intermediate was last quoted at US$75.12 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8191 euros, 91.58 yen, 1.166 AUD and 67.88 pence.