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US STOCKS-Bargain hunters tiptoe back but remain cautious

Published 08/22/2011, 04:59 PM
Updated 08/22/2011, 05:04 PM
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* Large-cap techs, industrials lead stocks higher

* BofA shares down 7.9 pct, biggest drag on Dow

* Credit Suisse cuts S&P year-end target to 1,100

* Investors await this week's Bernanke speech in Wyoming

* Dow up 0.3 pct, S&P flat, Nasdaq up 0.2 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates with volume; adds details on Fed meeting, Goldman's CEO hiring attorney)

By Angela Moon

NEW YORK, Aug 22 (Reuters) - U.S. stocks ended slightly higher on Monday after four weeks of losses as investors hesitated to take big risks without a catalyst for buying.

The market was led by large-cap techs and industrials until late in the session when a rally faded.

Banks struggled. Bank of America , the largest U.S. bank, fell 7.9 percent to $6.42, the biggest drop among the Dow's components. Chief Executive Brian Moynihan sent a memo to senior executives last week outlining plans to cut another 3,500 jobs. JPMorgan Chase lost 2.7 percent to $33.41.

"The ground zero of all worries is financials," said Charlie Smith, chief investment officer of Pittsburgh-based Fort Pitt Capital Group.

Google , Hewlett-Packard and IBM , were among the top gainers. Hewlett-Packard shares came back from a 20 percent decline on Friday in its worst day since 1987.

The S&P 500 has dropped 12.7 percent so far in August on fears of another recession and the intractable European debt crisis. The rebound came on lower volume than in recent days of selling.

"I don't see any major appetite for buying stocks. We are driven higher (today) because of selling exhaustion," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

One possible spark for the market could be Federal Reserve Chairman Ben Bernanke's Friday speech in Jackson Hole, Wyoming. Some in the market hope Bernanke will hint at additional stimulus measures that could buoy stocks.

"Until we get some kind of a catalyst from Europe regarding the sovereign debt crisis or from the Fed later this week, I expect range-bound trading with high intraday volatility," said Dailey.

The Dow Jones industrial average <.DJI> was up 36.85 points, or 0.34 percent, at 10,854.50. The Standard & Poor's 500 Index <.SPX> was up 0.29 point, or 0.03 percent, at 1,123.82. The Nasdaq Composite Index <.IXIC> was up 3.54 points, or 0.15 percent, at 2,345.38.

IBM shares gained 0.9 percent at $158.98 and Hewlett-Packard rose 3.6 percent to $24.45.

On Monday, Credit Suisse cut its year-end target for the S&P 500 to 1,100 from its previous level of 1,275. U.S. equity strategist Doug Cliggott cited expectations for lower earnings in coming quarters and little hope for price-to-earnings multiples to expand.

Speculation is widespread in financial markets that Federal Reserve Chairman Ben Bernanke will use his Friday speech at a central banker conference in Jackson Hole, Wyoming, to signal a new monetary offensive to support a faltering U.S. economy.

Bernanke, however, is most likely to outline gradual measures, which would disappoint those looking for something dramatic, such as a fresh round of bond buying, known as QE3.

The Fed chairman looks set to discuss ways the Fed could tweak its balance sheet as a means to put further pressure on medium and long-term interest rates and anchor them at low levels. These could be implemented in September and October at coming Fed meetings.

After the closing bell, shares of Goldman Sachs fell 2.4 percent to $104. Goldman Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney, according to a government source familiar with the matter.

Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank. Investigations of Goldman and its role in the 2007-2009 financial crisis continue. [ID:nN1E77L1G9]

About 8.46 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, in line with last year's daily average of 8.47 billion.

On the NYSE, decliners beat advancers by a ratio of four to three, while on the Nasdaq, about seven stocks fell for every six that rose. (Reporting by Angela Moon, Editing by Kenneth Barry)

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