(Updates to close)
By Ellis Mnyandu
NEW YORK, March 3 (Reuters) - The Dow and S&P closed
little changed on Monday as soaring commodity prices lifted
shares of mining and energy companies, offsetting a cash
squeeze at a high-profile mortgage lender that raised fears of
more fallout from the housing slump.
The surge in prices of commodities such as oil, gold,
platinum and silver buoyed the shares of natural resources
companies, including Alcoa Inc <AA.N>, which ended up 3.2
percent, and Exxon Mobil Corp <XOM.N>, up nearly 1 percent.
But financial shares took a beating after Thornburg
Mortgage Inc <TMA.N, a high-profile mortgage lender, said it
does not have enough cash to meet its creditors' demands,
driving its stock down 51.5 percent on concerns it might file
for bankruptcy.
The lender's woes troubled investors since it specializes
in jumbo mortgages considered among the less risky home
loans.
Souring profit expectations also dragged on bank shares,
pulling Citigroup Inc <C.N> down 2.6 percent and Bank of
America Corp <BAC.N> down 1.4 percent.
U.S. oil futures settled up 61 cents, or 0.6 percent, at
$102.45 per barrel, after earlier hitting an intraday record
at $103.95, and gold inched closer to $1,000 per ounce. The
jump in commodity prices exacerbated inflation concerns.
"There's not a single stitch of good news out there," said
Peter Kenny, managing director at Knight Equity Markets in
Jersey City, New Jersey.
The Dow Jones industrial average <> ended down 7.49
points, or 0.06 percent, at 12,258.90. The Standard & Poor's
500 Index <.SPX> rose 0.71 of a point, or 0.05 percent, to
close at 1,331.34. The Nasdaq Composite Index <> slipped
12.88 points, or 0.57 percent, to finish at 2,258.60.
The skyrocketing commodity prices "speaks to the
likelihood of inflation rearing its ugly head in the second
half of this year, just when everyone is expecting the market
to work its way through the subprime crisis," Kenny said.
"There's the prospect of stagflation."
Comments from billionaire investor Warren Buffett that a
recession was already under way also rattled investors, and
contributed to declines among other economically sensitive
sectors, including the shares of home builders.
The Dow Jones U.S. Home Construction Index <.DJUSHB>,
which includes shares of home builders such as Toll Brothers
<TOL.N> and Centex Corp <CTX.N>, tumbled 4.8 percent.
There also was disappointment about double-digit
percentage declines in monthly auto sales. General Motors
<GM.N> shares slipped 0.3 percent to $23.20 and Ford Motor Co
<F.N> lost 5.4 percent to $6.18.
Boeing Co <BA.N> was the biggest drag on the Dow after the
U.S. plane maker and defense contractor lost a
multibillion-dollar U.S. Air Force contract to competitors.
For details, see [] Boeing shares fell 2.6
percent to $80.67 on the New York Stock Exchange.
Trading was volatile, with indexes swinging between losses
and gains throughout the day.
The rally in the commodity markets prompted investors to
snatch up shares of natural resources companies, which helped
the S&P 500 snap a three-day losing streak.
Both the Dow and the Nasdaq marked a third straight down
session.
Market breadth was overly negative, with decliners
outpacing advancers on both the NYSE and the Nasdaq, and more
stocks hit fresh 52-week lows than new highs, reflecting a
broadly bearish tone. About eight stocks fell for every seven
that rose on the Big Board, while on the Nasdaq, about nine
stocks fell for every five that rose.
Shares of aluminum producer Alcoa ended at $38.32 on the
NYSE, up more than 3 percent, while miner Freeport McMoRan
Copper & Gold Inc <FCX.N> jumped 2.6 percent to $103.45. Exxon
Mobil shares climbed 0.9 percent to $87.75.
In contrast, Thornburg Mortgage shares closed at $4.32,
down 51.5 percent, and topped the New York Stock Exchange's
list of biggest percentage losers.
Citigroup ended at $23.09, down 2.6 percent, and Bank of
America, the No. 1 U.S. bank by market value, finished at
$39.18, down 1.4 percent. Both stocks weighed on the Dow
industrials and the S&P 500.
Shares of Lehman Brothers <LEH.N> fell 4.7 percent to
$48.61, while Bear Stearns <BSC.N> dropped 3.2 percent to
$77.32. Banc of America Securities cut first-quarter profit
estimates and price targets on four large U.S. investment
banks, including Goldman Sachs <GS.N>, citing the worsening
losses in the equity markets. Goldman Sachs shares fell 2.7
percent to $165.08.
Oppenheimer and Co., another brokerage, slashed its profit
views on the brokerage sector.
In economic news, an index of national manufacturing
activity from the Institute for Supply Management fell in
February, but the decline was not as steep as economists'
forecasts.
Volume was moderate on the NYSE, with about 1.57 billion
shares changing hands, below last year's average daily volume
of about 1.9 billion, while on the Nasdaq, about 2.20 billion
shares traded, above last year's daily average of 2.17
billion.
(Editing by Jan Paschal)
