Stocks trim gains as Apple pulls back

Updated: 8:21 p.m. ET

October exploded out of the starting blocks, giving investors every expectation of a huge rally powered by a surprising gain in U.S. manufacturing and surging European markets.

But the rally faded into something more ambivalent. For that we can blame Apple (AAPL), Amazon.com (AMZN), Starbucks (SBUX) and Microsoft (MSFT), all of which fell 1% or more. (Microsoft is the publisher of MSN Money.)

The Dow Jones industrials ($INDU) finished up more than 70 points, but roughly 30% of that gain was due to IBM (IBM), which hit an all-time high of $211.75 before closing at $210.47. But the Nasdaq Composite Index ($COMPX) saw a 31-point gain in the morning collapse into a small loss.

The pullback came as the dollar moved up against the euro, forcing commodity prices to give up gains. In addition, Federal Reserve Chairman Ben Bernanke didn't surprise investors much in an Indianapolis speech, except to say he expected interest rates to remain low even after the economy strengthens. His overarching concern is to get the jobs market moving again.

The Dow finished at 13,515, up 78 points. The blue chips had been up as many as 161 points. The S&P 500 gained 4 points to 1,444 -- but had been up more than 16 points. The Nasdaq fell 3 points to 3,114 after that early 31-point gain.

Article continues belowThe Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down 5 points to 2,794. But 54 of the stocks in the index were higher. The issue was Apple, down $7.71 to $659.39. Apple is the biggest influence on the index.

After the close, the New York State Attorney General Eric Schneiderman sued JPMorgan Chase (JPM), alleging that a business acquired in its 2008 takeover of Bear Stearns Cos. fraudulently marketed and sold mortgage-backed securities.

JPMorgan said it would fight the suit, saying the activities in question occurred before JPMorgan took over Bear Stearns. Still, JPMorgan shares were off 42 cents, or 1%, to $40.55 after hours; the shares had closed up 49 cents to $40.97 in regular trading.

Auto sales on tap in a busy week
Tuesday brings an important reports on auto sales for September. Futures trading suggests a modestly lower open for stocks.

This is a busy week for economic reports. On Wednesday, the Institute for Supply Management releases its September report on non-manufacturing. Payroll process ADP reports on private-sector employment growth.

On Thursday, the government reports on jobless claims and factory orders, while Challenger Gray & Christmas reports on mass layoffs. Friday brings the very important September report on unemployment and payroll growth as well as a Federal Reserve Report on consumer credit outstanding.

A rally with staying power? Maybe not yet
A big caveat with today's trading: Much of the early rally may well have been due to short-covering as traders who had sold borrowed shares, betting the market would move lower in the past week, started to buy them back to lock in profits. The selling may have been investors who had big profits from the rally that started in June.

You could see some skepticism about the markets. The 10-year Treasury yield was at 1.625%, down from Friday's 1.637%. If the rally were about improving prospects, you would expect stocks to pull money away from bonds and thus push interest rates higher.

The rally comes after stocks moved modestly lower last week as investors were startled by riots in Spain and Greece over the imposition of new austerity measures to try to solve their debt problems.

But September was a winner for U.S. stocks. The Dow was up 2.7% with the S&P 500 up 2.4% and the Nasdaq up 1.6%.

Gold and oil see early gains fade
Gold (-GC) reached as high as $1,794.40 an ounce, its highest level since November, before pulling back to $1,783.30, up $9.40. Gold is up 13.8% this year and was up 10.6% in the third quarter.

Crude oil (-CL) in New York settled up 29 cents a barrel to $92.48 after climbing to as high as $93.33. Brent crude was down 12 cents to $112.20 a barrel.

Natural gas (-NG) for November delivery settled at $3.480 per million British thermal units after hitting $3.486, its high for the year, on expectations of very cool weather in the Northeast and Midwest.

The national average price of gasoline was at $3.782 a gallon, down slightly, according to AAA's Daily Fuel Gauge Report.

One factor weighing on gold and oil was that the U.S. dollar had recovered from early lows.

Energy prices -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Crude oil (-CL)			$92.48			$92.19			0.31%			-6.43%
(per barrel)
Heating oil (-HO)			$3.1358			$3.1592			-0.74%			7.60%
(per gallon)
Natural gas (-NG)			$3.4800			$3.3200			4.82%			16.43%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.9201			$2.9201			0.00%			9.89%
(per gallon)
Brent crude			$112.19			$112.39			-0.18%			4.48%
(per barrel)
Retail gasoline			$3.7820			$3.7830			-0.13%			15.45%
(per gallon; AAA)

ISM view on manufacturing brings some cheer
The good news by far today was the ISM manufacturing index, which rose to 51.5 from 49.6 in August. Most economists had expected little change.

The rebound "will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon," Paul Dales, senior U.S. economist at Capital Economics, wrote in a client note today.

While the manufacturing index brought cheer, a Commerce Department report said construction spending slipped 0.6% in August from July, although up 6.5% from a year ago. While residential construction is showing improvement, private nonresidential spending fell 1.7%, and public construction spending was down 0.8%.

Apple still getting buffeted
Apple's 4.7% decline last week was set off by lower-than-hoped-for​ sales of the new iPhone 5 and glitches in its mapping program so annoying that CEO Tim Cook had to apologize about them. It appeared the concerns about the iPhone haven't gone way.

Google (GOOG), meanwhile, closed up $7.28 to $761.78, and its market capitalization of $249.1 billion exceeded that of Microsoft for the first time. Microsoft, whose market cap was $246.40 billion, was off 27 cents to $29.49 after a downgrade to "sector perform" from RBC Capital Markets.

3M (MMM) agreed to acquire Ceradyne (CRDN) for $35 a share -- a 43% premium over its Friday close. Ceradyne makes advanced ceramics used in defense, industrial, energy and automotive applications. The deal has an aggregate value of about $860 million, including debt, 3M said. Excluding one-time costs, 3M said, the acquisition will add about a penny a share to the company's in the first 12 months after the deal closes. 3M was up 87 cents to $93.29. Ceradyne was up $10.54 to $34.97.

Nokia (NOK) and Oracle (ORCL) are expected to announce a deal that will give Oracle's customers access to Nokia's mapping service. Nokia was up 18 cents to $2.76. Oracle added 21 cents to $31.67.

The U.S. Defense Department on Friday awarded United Launch Alliance, a 50-50 joint venture of Lockheed Martin (LMT) and Boeing (BA), a $1.17 billion contract to provide satellite launches using its Delta IV and Atlas V rockets. Lockheed Martin was up 6 cents to $93.44. Boeing added 42 cents to $70.01.

Lastly, we should note that Yahoo (YHOO) CEO Marissa Mayer gave birth Sunday night to a boy. Mayer had disclosed she was pregnant when she took the Yahoo job in July. She plans to take a maternaty leave of a few weeks but will work through it. Mayer is in the midst of reorganizing the company.

Yahoo shares were down 15 cents to $15.83.

Twenty-six of the 30 Dow stocks ultimately finished with gains on the day. United Health Group (UNH) was the leader, up $1.05 to $56.46, followed by American Express (AXP) and Bank of America (BAC). The laggards were Microsoft and Caterpillar (CAT).

Meanwhile, 293 S&P 500 stocks were higher, led by for-profit education company DeVry (DV), Integrys Energy (TEG) and Tyson Foods (TY). The laggards were Sprint Nextel (S) and Molson Coors (TAP).

Of the 54 Nasdaq-100 gainers, Research In Motion (RIMM) and Fastenal (FAST) were the leaders. Chinese Website Baidu (BIDU) and Micron Technology (MU) were the laggards.

Short hits from the markets -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0800%			0.090%			-11.11%			700.00%
5-year Treasury note			0.620%			0.630%			-1.59%			-25.30%
10-year Treasury note			1.625%			1.637%			-0.73%			-13.15%
30-year Treasury bond			3.032%			3.032%			0.00%			4.95%
Currencies
U.S. Dollar Index			79.909			80.025			-0.14%			-0.76%
British pound			1.6134			1.6160			-0.16%			3.84%
(in U.S. $)
U.S. $ in pounds			£0.620			£0.619			0.16%			-3.70%
Euro in dollars			$1.29			$1.29			0.28%			-0.52%
(in U.S. $)
U.S. $ in euros			€ 0.776			€ 0.778			-0.28%			0.52%
U.S. $ in yen			78.13			77.97			0.20%			1.33%
U.S. $ in Chinese			6.31			6.28			0.40%			-0.32%
yuan
Canada dollar			$1.018			$1.017			0.13%			3.77%
(in U.S. $)
U.S. dollar			$0.983			$0.984			-0.06%			-3.64%
(in Canadian $)
Commodities
Gold (-GC)			$1,783.30			$1,773.90			0.53%			13.82%
(per troy ounce)
Copper (-HG)			$3.786			$3.758			0.73%			10.17%
(per pound)
Silver (-SI)			$34.9520			$34.5770			1.08%			25.21%
(per troy ounce)
Wheat (-ZW)			$8.8425			$9.0250			-2.02%			35.47%
(per bushel)
Corn (-ZC)			$7.5675			$7.563			0.07%			17.05%
(per bushel)
Cotton			$0.7120			0.7065			0.78%			-22.34%
(per pound)
Coffee			$1.7805			1.735			2.62%			-22.47%
(per pound)
Crude oil (-CL)			$92.48			$92.19			0.31%			-6.43%
(per barrel)