Market Talk

The Dow Jones Industrial Average closed slightly lower as another round of interest-rate hikes in China weighed on blue-chip index.

DJIA drops 18 (0.2%) to 11555, with Procter & Gamble and Kraft leading declines. The Dow traded in another narrow range, falling as much as 55 points while rising less than a point before reaching the closing bell. The narrow range marked 16th straight day that the index had a swing range of less than 100 points. The last time such a streak occurred was in 1996.

Meanwhile, S&P 500 rises 0.1% to 1258 behind strength in financial sector. Nasdaq Comp gains 0.1% to 2667.

Holidays combine with big winter storm to cause trading volume to slow to a crawl. Monday contained the lightest volume of any fully day of trading on the New York Stock Exchange in 2010.

H&R Block drops 7% to $11.80 after disclosing HSBC Holdings is ending its long-term contract for controversial refund anticipation loans. AIG gains 9.3% to $59.38 after securing three credit facilities totaling $4.3B.

A winter storm slams the east coast and leaves retailers scrambling to recover sales. But in a surprising development, natural gas prices drop as traders focus on warmer weather expected later this week. Meanwhile, the Treasury market prepares for its final auctions of the year. Brian Baskin, Deborah Lynn Blumberg and I discuss it all more on today’s edition of The Markets Hub.

Unless you’re selling snow shovels or blowers, the winter storm that blanketed the northeast hasn’t been too friendly to retailers.

Blizzard conditions have dropped more than a foot of snow in some areas on the east coast, which have wrecked havoc on air traffic, train service and left driving conditions extremely dicey. All those conditions don’t bode well for retailers who count on heavy foot traffic for significant sales on the day after Christmas. Dow Jones’ Corrie Driebusch reports:

Snowstorms hitting midwest and east coast dampen retailers’ Christmas spirits, says NPD Group. With Christmas on Saturday and Sunday lost to blizzards, retailers scrambling to recover sales. This year the day after Christmas — generally one of the biggest days of the year for shopping — “was poised to be one of the top six days of retail,” firm says. Now it warns this is likely no longer the case. Retailers may be able to recover, but it’ll take two to three weeks longer. New Years next weekend set to distract customers from shopping, too, which will deal yet another blow to retailers.

But it’s not all bad for retailers. The winter storm has given a pop to sales at home-improvement chains. Dow Jones’ Max Murphy reports Home Depot (HD) says it “saw strong demand for snow shovels, snow blowers and ice melt along the East Coast — from North Carolina to Maine.”

Home Depot shares were recently up 0.3% at $35.18.

Apologies for the light posting this morning. Snowmageddon has left the newsroom nearly empty this morning.

US stocks are trading lower Monday morning, following weak overseas markets, as China’s rate increases are stoking fears that it may try to slow its booming economy.

The Dow Jones Industrial Average was recently down 35 points, or 0.3%, to 11539. Trading volume appears to be lower than usual, with less than a billion shares having changed hands in NYSE Composite trading within the first hour and a half of the session. The 2010 average for a full-day session is around 4.8 billion shares.

The holiday-shortened week combined with heavy snow blanketing the east cost are contributing to today’s light volume.

Main driver for Monday’s action was China’s decision over the weekend to hike both its key lending and deposit rates by 0.25 percentage points as it attempts to keep inflation under control. This was the second rate hike in slightly more than two months and economists are anticipating additional increases in 2011.

Consumer discretionary stocks led the S&P 500 down 2 points to 1255. H&R Block fell after disclosing late last week that HSBC Holdings was terminating its long-term contract for refund anticipation loans.