US stocks closed slightly lower on Monday, with Boeing among the decliners as investors grew concerned about the potential impact on global growth from the Group of 20's pledge to cut deficits. Still, a Supreme Court decision lifted tobacco companies including Reynolds American and Altria Group.
The Dow Jones Industrial Average fell 5.29 points (0.05%) to 10,138.52. JP Morgan Chase was the measure's worst performer with a decline of 90 cents (2.3%) to $38.54. Boeing slipped $1.47 (2.1%) to $67.30, and Alcoa dropped 20 cents (1.8%) to $11.03.
Keeping the Dow's drop in check, Intel climbed 33 cents (1.6%) to $20.36, while Coca-Cola advanced 82 cents (1.6%) to $51.08, and Wal-Mart Stores added 77 cents (1.6%) to $49.57.The Nasdaq Composite declined 2.83 (0.13%) to 2,220.65. The Standard & Poor's 500 index lost 2.19 (0.20%) to 1,074.57. The consumer staples and telecommunications sectors climbed. But their gains were outweighed by a slump across the energy and materials sectors as investors fretted that global demand for commodities could be hurt if governments adopt austerity measures. The G20 nations pledged to halve their deficits by 2013 and stabilise their debt by 2016.
The gains among consumer staples were led by tobacco companies after the Supreme Court rejected an appeal by the government that sought to revive a rejected attempt to get tobacco companies to forfeit as much as $280bn in profits and pay $10bn for smoking-cessation programs. The tobacco companies had also filed an appeal. Reynolds American jumped $2.08 (4.1%) to $53.45, Altria Group rose 64 cents (3.3%) to $20.34, and Lorillard climbed $1.77 (2.5%) to $73.54.
The telecom sector was boosted by a memorandum signed by President Barack Obama that would nearly double the amount of federal and commercial spectrum available for smartphones and wireless Internet devices. Sprint Nextel jumped 26 cents (6.2%) to $4.46, while AT&T rose 16 cents (0.7%) to $24.95.
Nevertheless, Monday's session was relatively quiet, with stocks fluctuating between small gains and losses throughout the day without much clear direction.
Aflac rose $1.19 (2.7%) to $44.78. The insurer said it will post an $80m gain on deals involving so-called perpetual securities, but will take a $67m charge for the sale of all its Greek sovereign debt.
Noble Corp. climbed 72 cents (2.5%) to $30. The offshore drilling contractor said it agreed to acquire privately held drilling company FDR Holdings Ltd. for $2.16bn in cash, as it seeks to strengthen its role in a sector squeezed by a contested moratorium on deepwater exploration in the Gulf of Mexico. Noble also announced the signing of new contracts with oil giant Royal Dutch Shell that will lend some stability during the drilling ban.
Bucyrus International dropped $2.36 (4.4%) to $50.83, after the mining-equipment maker said it may lose a $310m order for mining machinery from a subsidiary of Reliance Power Ltd. of India because of a decision by the US Export-Import Bank against providing loan guarantees for the project.
Cabot Oil & Gas edged up 44 cents (1.3%) to $33.37, after the producer of oil and natural gas said a new well for natural gas from its shale gas lands was very positive. The company added that total production is now at about 375m cubic feet per day, above its daily published guidance levels for the second half of the year.
For Australian ADRs listed on the NYSE, BHP Billiton slipped $1.28 (1.88%) to US$66.71, Rio Tinto Plc weakened 38 cents (0.78%) to US$48.40, ResMed fell 5 cents (0.08%) to US$61.64, Telstra Corporation weakened 8 cents (0.55%) to US$14.40, Telecom Corporation of NZ dropped 20 cents (2.88%) to US$6.74 and Westpac shed $1.23 (1.3%) to US$93.49.
In economic news, US consumer spending showed a 0.2% increase in May, after a flat reading in April, due to a healthy rise in incomes and continued low prices. Incomes are up 0.4% in May after a 0.5% rise in April. The figures are in line with economists' estimates.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.02% and the five year yield was 1.83%.
European shares posted gains on Monday, with carmakers and commodity-sector firms climbing, as one broker said low valuations and sentiment should limit downside for stocks.
The Stoxx Europe 600 index rose 1.2% to 251.36.
Of the regional benchmarks, the UK FTSE 100 index rose 0.5% to 5,071.68, the German DAX index added 1.4% to 6,157.22 and the French CAC-40 index advanced 1.6% to 3,576.45.
Investors bought shares in Spanish oil and gas firm Repsol, up 2.7%, after the firm was upgraded to buy from neutral. A broker said an aggressive EUR28bn investment program from 2010 to 2014 will ultimately drive top-quartile exploration and production growth, significantly enhance the profitability of its refineries and materially grow its liquefied natural gas business.
Elsewhere in the commodity sector, Rio Tinto shares advanced 1.8% and Antofagasta shares rose 2.5%.
Autos were also on the move, taking back losses made on Friday when negative broker comments weighed on the sector. Daimler shares were up 2.8%, BMW shares rose 2%, and Volkswagen preference shares added 1.2%.
Asian stock markets ended mixed in cautious trade as investors digested the weekend communique from the Group of 20 nations.
The Nikkei Stock Average fell 0.4% in Tokyo, while China's Shanghai Composite Index gave up 0.7% and Hong Kong's Hang Seng Index climbed 0.2%.
New Zealand shares closed weaker as tepid offshore leads and ongoing concerns about bellwether Telecom continued to weigh on sentiment. The benchmark NZX-50 fell 0.9%, or 25.70 points at 3,008.41.
Base metals closed mixed and analysts predict prices could soften in the coming days as investors look to square their positions ahead of the half-year end. Aluminium rose $5 (0.22%) to $2,010 while copper fell $55 (0.80%) to $6,805 and nickel firmed $345 (1.73%) to $20,330. Zinc weakened $15 (0.80%) to $1,860 and lead dropped $15 (0.81%) to $1,830. Comex copper was last quoted at 307.45 US cents per pound.
Gold futures pulled back just shy of a fresh record high, as the metal's rally lost momentum and a stronger US dollar pressured the market. Spot gold was last quoted at $1,239.10. Comex gold futures declined $17.60 (1.40%) to $1,238.60. Spot silver was last quoted at $18.68.
Crude fell slightly as the first tropical storm of the season is expected to be less of a threat to US Gulf of Mexico oil infrastructure than earlier feared.
West Texas Intermediate was last quoted at US$78.25 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8147 euros, 89.38 yen, 1.147 AUD and 66.24 pence.