Stocks mixed on Wall Street after late loss Friday

Associated Press
In this Friday, May 31, 2013, photo, traders use their handheld devices as they work  on the floor of the New York Stock Exchange. Uncertainty about the U.S. Federal Reserve's next course of action and a sharp, sudden plunge on Wall Street sent global stock markets lower Monday June 3, 2013. (AP Photo/Richard Drew)
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In this Friday, May 31, 2013, photo, traders use their handheld devices as they work on the floor of the New York Stock Exchange. Uncertainty about the U.S. Federal Reserve's next course of action and a sharp, sudden plunge on Wall Street sent global stock markets lower Monday June 3, 2013. (AP Photo/Richard Drew)

NEW YORK (AP) — The stock market is starting out June better than it ended May.

Indexes stabilized in early trading Monday after finishing last month with a swoon late Friday afternoon.

The Dow was up 43 points at 15,167 as of 11:15 a.m. Eastern Daylight Time Monday, or 0.3 percent. It plunged 208 points Friday, its worst drop in six weeks. The Standard & Poor's 500 index was down five points at 1,625, or 0.3 percent.

Even though stocks closed May higher, signs that this year's rally have started to falter are starting to emerge. The Standard & Poor's 500 index closed higher for a seventh straight month, but the index also logged its first back-to-back weekly declines since November.

The Institute for Supply Management May index reported Monday that U.S. manufacturing contracted last month for the first time since November. Its index of manufacturing was the lowest since June 2009.

The yield on the 10-year Treasury note fell to 2.10 percent after the industry group reported the contraction. It was trading at 2.17 percent minutes before the survey was released at 10 a.m.

The drop in the note's yield means investors shifted money into U.S. government bonds in anticipation of slightly weaker U.S. economic growth. Investors tend to buy bonds when they want relatively safe assets that are less likely to lose value if the economy slows.

The weakening outlook for manufacturing will be good for investors who are keen for the Federal Reserve is keep up its $85 billion a month of bond purchases. Speculation that central bank was set to ease that stimulus, a major support for this year's rally in stocks, has caused stock trading to become volatile in the last two weeks.

"This negates some of the fears that the Fed is going to do something in the next six to eight months," said Peter Cardillo, chief market economist at Rockwell Global Capital. "It's bad news which is good."

The yield on the 10-year Treasury note, which is used to set interest rates on many kinds of loans including home mortgages, is about half a percentage point higher than it was at the start of the last month and is at its highest in more than two years.

As Treasury yields fell, rich dividend-paying stocks like power and phone companies and the makers of consumer staples reversed early losses. Those three sectors, which had been investor favorites in the first quarter, declined in May as bond yields rose.

In other trading, the Nasdaq composite fell 17.30 points, or 0.5 percent, to 3,438.

In commodities trading, oil climbed 95 cents, or 1 percent, to $92.92 a barrel. Gold rose $14.70, or 1 percent, to $1,407 an ounce. The dollar fell against the euro and against the Japanese yen. The U.S. currency dropped back below the 100 yen level.

Among stocks making moves:

Cracker Barrel Old Country Store rose $4.59, or 5.2 percent, or $94.14 after the restaurant operator said its fiscal third-quarter profit rose 30 percent as higher prices on its menus helped increase its sales.

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