Stocks pare losses on better service sector data

STEVE ROTHWELL AP Markets Writer Published:

NEW YORK (AP) -- Stocks were flat on Monday as investors weighed an improving outlook for the U.S. economy against a report that showed Chinese manufacturing contracted for the fourth straight month in April.

KEEPING SCORE: The Standard & Poor's 500 index was flat at 1,881 as of 11 a.m. Eastern time. The Dow Jones industrial fell three points, or less than 0.1 percent, to 16,509. The Nasdaq composite rose five points, or less than 0.1 percent, to 4,128.

SERVICE GROWTH: U.S. service firms grew more quickly last month as sales and new orders rose, adding to other evidence that the economy is picking up after a slow start to the year. The Institute for Supply Management says its service-sector index rose to 55.2 in April from 53.1 in March. Any reading above 50 indicates expansion.

DRUG STORE SALES: Walgreen rose $1.04, or 1.5 percent, to $69.92 after the company reported revenue from established drugstores jumped 7.6 percent last month, topping analysts' expectations. Sales were helped by a later Easter holiday.

CHINA SLOWDOWN: China's manufacturing contracted in April, but the pace of decline was less severe, suggesting the downturn in the world's No. 2 economy is bottoming out. HSBC's purchasing managers' index released Monday ticked up to 48.1 from 48.0 in March on a 100-point scale. Numbers above 50 indicate expansion.

BOND HIT: JPMorgan slumped $1.08, or 1.9 percent, to $54.48 after the bank said late Friday in a quarterly filing that it expects revenue from its bond and stock market unit to be down about 20 percent in the second quarter in a "continued challenging environment." The bank's first-quarter earnings were crimped by lower revenues at its bond trading business.

WEAK DRUGS: Pfizer fell 66 cents, or 2.1 percent, to $30.10 after the drug company said Monday that its first-quarter profit dropped 15 percent despite sharp cost-cutting. The earnings decline reflected competition from cheaper generic drugs. Pfizer has been trying since January to get British rival AstraZeneca to discuss its bid to buy the company, but AstraZeneca continues to rebuff Pfizer.

BONDS AND COMMODITIES: Bond prices fell. The yield on the 10-year Treasury note edged up to 2.61 percent from 2.59 percent on Friday. The yield is close to its lowest of the year and has fallen from 3 percent at the start of January. The price of oil fell 19 cents, or 0.2 percent, to $99.53 a barrel.