Stocks: Investors keep wary eye on Europe

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NEW YORK (CNNMoney) — U.S. stocks held above the breakeven line Monday as investors were stymied by renewed worries about Europe’s debt problems.

The Dow Jones industrial average (INDU) rose 6 points, or less than 0.1%, at midday. The S&P 500 (SPX) gained less than a point, and the Nasdaq Composite (COMP) was up 3 points, or 0.1%.

With no U.S. economic reports on tap Monday, investors were focused on the worsening fiscal problems in Greece.

Standard & Poor’s cut Greece’s credit rating again, and warned that many of the nation’s banks are at risk of further downgrades. That came on the heels of rumors last week that the debt-ridden country could abandon the euro or seek another bailout.

“We have seen this show before,” said Mark DeGennaro, managing director at The Collingwood Group. The European Union, he said, “will step up and accommodate Greece in some form or fashion and this issue will be pushed to the back burner.”

Stocks were also getting some support Monday from a rebound in the commodities market. After a major sell-off last week, silver prices jumped nearly 5% and gold rose about 1%. Oil prices gained 2% to trade near $99 a barrel.

The recovery in commodities boosted shares of companies in the materials and industrial sectors, including Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500) and DuPont (DD, Fortune 500).

Shares of McDonald’s (MCD, Fortune 500) rose 1.2% after the fastfood chain said sales rose 6% in April.

But gains on the Dow were offset by shares of Intel (INTC, Fortune 500), which fell nearly 2%. Bank of American (BAC, Fortune 500) and JPMorgan (JPM, Fortune 500) were also weak.

Traders said the market was waiting for more clarity about the state of the U.S. economy. Indicators have been mixed recently, with signs of weakness in the services sector and a surprisingly strong employment report on Friday.

“There’s more fear in the market that we’re in for a summer slowdown,” said Paul Zemsky, head of asset allocation at ING Investment Management.

Investors are particularly concerned that the recent spike in gas prices could stifle consumer spending and undermine the economy. As such, a report due Thursday on retail sales will receive extra scrutiny, said Zemsky.

But overall, “we’re still bullish on risky assets,” such as stocks, he said.

Stocks edged higher Friday, as the dollar rallied and investors responded to a stronger-than-expected jobs report.

But all three indexes closed down more than 1% for the week, as weakness in commodities — especially silver and crude — spilled over into the broader market.

Companies: Citigroup (C, Fortune 500) conducted a 1-for-10 reverse stock split after the closing bell Friday, meaning that the number of shares outstanding were reduced to bolster the stock price. Citi’s stock edged lower in early trading to $44.75. Last week, it was trading at around $4.50 a share.

Citi shares fell nearly 3%.

Shares of Dollar Thrifty (DTG) surged neraly 12% after Hertz (HTZ, Fortune 500) edged announced a new offer to buy the rival rental car company.

Economy: The Federal Reserve will issue its quarterly survey on household credit after Monday’s opening bell.

Among the key reports due later in the week are the March trade balance, due Wednesday, the April retail sales figures on Thursday and a reading on April consumer prices slated for Friday.

World markets: European stocks were all lower as investors continued to fret about Greece’s debt problems. Britain’s FTSE 100 edged down 0.6%, the DAX in Germany fell 1.1% and France’s CAC 40 slid 1.3%.

Asian markets ended mixed. The Shanghai Composite edged up 0.3% and the Hang Seng in Hong Kong rose 0.8%, while Japan’s Nikkei slid 0.7%.

China will also be on investors’ minds Monday. The country will release its latest trade gap figures overnight. Meanwhile, Treasury Secretary Tim Geithner will meet with Chinese leaders Monday and Tuesday to talk about economic issues, which will most likely include discussions about the yuan-dollar relationship.

Currencies and commodities: The dollar edged up against the Japanese yen very slightly, dipped against the euro and was little changed against the British pound.

Oil for June delivery gained $1.82 to $99 a barrel.

Gold futures for June delivery rose $10.40 to 41,502 an ounce.

Silver futures for July delivery rose $1.80 to $37.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged up, pushing the yield down to 3.15%.  

First Published: May 9, 2011: 9:49 AM ET