U.S. market averages turned in a lackluster performance, losing direction after the initial gains. The downward move by the Nasdaq was due to weakness in the tech sector, following a profit warning from Lexmark (LXK: chart). The stock dropped 6%. Strong gains by General Motors (GM: chart) and Boeing (BA: chart), respectively 2% and 1.2%, helped keep the Dow above the flat line.

Housing, health care provider, and retail stocks posted strength, while hardware and telecoms stocks declined. Significant strength emerged in the semiconductor sector, led by Advanced Micro Devices (AMD: chart), KLA-Tencor (KLAC: chart), and Xilinx (XLNX: chart), each rising 2%. Gold stocks continued to post strong gains.

Takeover activity was again in the spotlight, as after Hexion Specialty Chemicals Inc. raised its acquisition bid for chemical company Huntsman Corp. (HUN: chart) by 2.8% to $10.5 billion. In other corporate news, FedEx (FDX: chart) rose 3.7% on speculations that the package delivery company could become a target for private equity buyers because of its modest valuation and turnaround potential.

In mid-afternoon trading, the Dow Jones industrials rose 24.06, or 0.18%, to 13,635.74. The Standard & Poor's 500 index fell 0.74, or 0.05%, to 1,529.70, and the Nasdaq composite index rose 0.67, or 0.03%, to 2,667.18. The yield on the benchmark 10-year Treasury note dipped to 5.16% from 5.18% on Friday.


9:45AM Wall Street opened higher on falling bond yields.

Wall Street opened in the positive territory Monday amid investor optimism that Q2 corporate earnings will be solid and will help give the market some direction. Alcoa will traditionally kick off the season after the closing bell. Falling bond yields and fresh merger deals also generated positive sentiment.

The blue-chip average was led higher by Boeing Co. (BA: chart). Company’s shares rose 2% after it unveiled its 787 Dreamliner and announced new orders for the plane. Home Depot (HD: chart) was another gainer on the Dow. It gained 1% following an upgrade to buy at Goldman Sachs, with the broker citing changes in management an improved capital structure. Aluminum producer (AA: chart) is expected to report a profit of 83 cents per share. Its shares added 0.6%.

On the deal news front, investors in the Chicago Board of Trade (BOT: chart) are due to vote on whether to accept an improved offer from the Chicago Mercantile Exchange (CME: chart) or not. Further in M&A action, Carlyle agreed to buy Sequa in a deal worth $2.7 billion. First Indiana (FINB: chart) surged 41% after Marshall & Ilsey (MI: chart) agreed to buy it $32 a share.

Among the most notable movers, Lexmark (LXK: chart) fell 11% after it warned over Q2 and Q3 earnings, due to weaker-than-forecast sales of inkjet supplies and pricing. Alnylam Pharmaceuticals (ALNY: chart) jumped over 50% after news it will receive payments of $331 million upfront and up to $1 billion in milestones from Roche Holdings.

In the first few minutes of trading, the Dow Jones industrials rose 40.57, or 0.30%, to 13,652.25. The Standard & Poor's 500 index added 2.96, or 0.19%, to 1,533.40, and the Nasdaq composite index rose 4.79, or 0.18%, to 2,671.30. The yield on the benchmark 10-year Treasury note dipped to 5.15% from 5.18% on Friday.


9:30AM London trades higher on broker upgrades and deal news.

London equities are trading higher on Monday as Tate & Lyle boosted the market after Credit Suisse upgraded the stock and after Rolls Royce have been selected by International Lease Finance Corporation to power 40 of the 74 Boeing 787 Dreamliners in a deal worth $ 1.3 billion. The FTSE 100 is trading 0.29% higher at mid-day at 6,710.

Economic news

Official data posted today showed a larger than expected rise in UK factory gate inflation in June, although higher oil prices have ensured costs stay high. It is the second straight month that the figure has missed forecasts, with a 0.2% increase in output prices last month after a 0.4% gain in May. Analysts had forecast a 0.3% increase.

Gainers of the Day

Sugar and sweeteners company Tate & Lyle surged 4.8% after a Credit Suisse upgrade to outperform from neutral with price target lifted to 640p from 630p. Rolls Royce’s Trent 1000 engines have been chosen by International Lease Finance Corporation to power 40 of the 74 Boeing 787 Dreamliners it has on order in a deal worth $1.3bn. Rolls Royce advanced 2%. Hedge company Absolute Capital has shrugged off recent problems for the sector in the US and forecast interim profits would be ahead of forecasts. Absolute rallied almost 13%.

Decliners of the Day

Housebuilders plunged although Bovis Homes' trading statement was upbeat today. The housebuilder posted good interim pre-tax profit growth matching the group internal expectations, but added that recently it has seen a slowdown in both visitor rates and in reservation rates. Bovis dipped 8.8% and Persimmon, Taylor Wimpey and Redrow are down in sympathy. Persimmon lost 3.5%, Taylor Wimpey shed 2.6% and Redrow was off 4.9%.