Stocks trade in tight range as investors balance Dubai fears with holiday retail sales

Stocks zigzag as investors weigh consumers, Dubai

NEW YORK — Investors set aside some of their worries about a possible debt crisis but shied away from big moves as they focused on consumers.

Stocks traded in a narrow range Monday, steadying after Friday’s steep drop. Global markets are rebounding after falling in response to news that Dubai World, the main investment arm of the Persian Gulf city-state, asked to defer payments on $60 billion in debt for six months.

Investors were initially anxious about the possibility that a debt default by Dubai could touch off a new round of lending problems even as credit markets are still recovering from last year’s near-shutdown following the collapse of Lehman Brothers.

However, it appeared U.S. investors hold little of Dubai’s debt, which has eased some concerns. The United Arab Emirates, where Dubai is located, also said Sunday it will make extra funding available to all banks in the country, including foreign banks with local offices.

Rob Lutts, president and chief investment officer of Cabot Money Management, said that while some investments will be lost in Dubai, the global stock markets have now accounted for those potential losses.

“We’ve seen the impact,” Lutts said, pointing to Friday’s sharp declines. “I think that issue is known now.”

Investors turned to consumers, whose spending is the biggest driver of the U.S. economy. Preliminary figures by ShopperTrak, a research firm that tracks more than 50,000 outlets, showed sales rose 0.5 percent on Friday, the unofficial kickoff to the holiday shopping season. Online sales jumped 11 percent Thursday and Friday, according to comScore, an Internet research firm.

The National Retail Federation trade group said Sunday it still expects holiday sales to slip 1 percent compared with last year.

In late morning trading, the Dow Jones industrial average slipped 0.15, or less than 0.1 percent, to 10,309.77. The broader Standard & Poor’s 500 index rose 0.02, or less than 0.1 percent, to 1,091.51, and the Nasdaq composite index fell 8.63, or 0.4 percent, to 2,129.81.

Investors showed some hesitancy to buy following news that the New York Federal Reserve would carry out small-scale reverse repurchase agreements. The U.S. Federal Reserve could use reverse “repo” agreements, as they’re known, to remove liquidity from the market. Policymakers have flooded the financial system with cash to drive down borrowing costs and prop up the economy.

The New York Fed, which conducts the central bank’s market operations, said the latest move wasn’t a shift in policy but rather a preparation for when the Fed decides to rein in some of its supports for the economy.

The modest moves came after stocks tumbled in holiday-shortened trading Friday on concern about Dubai’s debt problems. The Dow dropped 155 points before closing three hours early for the Thanksgiving holiday. It had fallen much as 233 points in early trading.

The move away from riskier stocks sent the price of safe-haven investments like Treasury bonds higher.

On Monday, bond prices retreated, sending yields higher. The yield on the benchmark 10-year Treasury note rose to 3.22 percent from 3.21 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.05 percent from 0.01 percent.

The dollar mostly fell against other major currencies, while gold rose.

In economic news, the Chicago Purchasing Managers index, which measures Midwestern manufacturing, rose to 56.1 in November from 54.2 in October. New orders rose and employment improved, while production expansion slowed.

Light, sweet crude rose 44 cents to $76.49 per barrel on the New York Mercantile Exchange.

Four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 286.7 million shares.

Overseas, Japan’s Nikkei stock average rose 2.9 percent. Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX fell 0.4 percent and the CAC-40 in France dropped 0.5 percent.