Blue-chip stocks rose Monday as news that DaimlerChrysler had found a buyer for its beleaguered Chrysler unit boosted automotive shares, but the broader market fell amid renewed concerns about the economy's health.
Private equity firm Cerberus Capital Management agreed to buy 80% of Chrysler Group from its German parent company for $7.4 billion. Bear Stearns said the Chrysler sale was good news for General Motors and Ford Motor and raised its rating on GM stock, which gained almost 4%.
But the boost among auto stocks, which briefly pushed the Dow Jones industrial average to a new trading high, was offset by declines in other sectors after a survey by a Federal Reserve bank indicated that forecasters had cut estimates for U.S. economic growth in the second quarter
Also keeping a lid on share prices was wariness about today's release of the government's consumer price index.
"People are waiting to get a better read on some of the pricing data," said Jack Caffrey, equity strategist at J.P. Morgan Private Bank. "It does seem like there's a bit of a holding pattern."
The Dow Jones industrial average climbed 20.56 points, or 0.2%, to end at 13,346.78. The Standard & Poor's 500 index slipped 2.70 points, or 0.2%, to 1,503.15. The Nasdaq composite index was down 15.78 points, or 0.6%, at 2,546.44.
The Russell 2,000 index of smaller-company stocks fell 7.21 points, or 0.9%, to 822.33.
Declining stocks outnumbered advancing issues by about 7 to 4 on the New York Stock Exchange.
Bond yields advanced. The yield on the benchmark 10-year Treasury note rose to 4.70% from 4.67% late Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Crude oil climbed 9 cents to $62.46 a barrel on the New York Mercantile Exchange. U.S. retail gasoline prices rose to fresh records, according to two surveys.
In the auto sector, DaimlerChrysler rose $2.12, or 2.6%, to $84.12. GM, one of the 30 Dow components, climbed $1.16, or 3.9%, to $30.62. Ford gained 34 cents, or 4.1%, to $8.71.
In the buyout of Chrysler by Cerberus, "The market sees a sophisticated investment group that is finding value in the auto group," said Jerome Dodson, president of Parnassus Investments in San Francisco.
As a result, he said, investors are asking whether "GM and Ford are worth more than their stock price indicates."
In other market highlights:
