Stocks finish mostly lower
Wall Street closed mostly lower Monday as lingering concerns about the economy offset better-than-expected sales from Wal-Mart Stores and a flurry of acquisition activity.
Wal-Mart rose after the world’s largest retailer said it expected January same-store sales to rise 2.2%. Tempering the gain was its projection that sales performance was on track to deliver the lowest growth rate in more than 25 years.
Wall Street absorbed a spate of acquisition and private equity deals, including a private equity fund’s offer to buy Triad Hospitals and State Street’s agreement to buy Investors Financial Services.
Investors had little reaction to new data that suggested continued economic growth, which could dash the hopes of some for a Fed rate cut this year. The Institute for Supply Management’s non-manufacturing index, which covers the service sector, increased more than analysts were forecasting.
Wall Street is in a holding pattern now that the Fed’s decision to hold rates is behind it and the quarterly earnings season is largely over. Analysts say investors are monitoring what central bankers might have to say in upcoming speeches and any corporate or economic news to find direction.
“We’re just going to have a topsy-turvy market until investors figure out which direction to take,” said Todd Leone, managing director of equity trading for Cowen & Co. “We’re seeing some buying come back into the market because there still is a lot of money on the sidelines. And all these deals announced are really helping the market out.”
The Dow Jones industrial average rose 8.25 points, or 0.1%, to 12,661.74.
Broader stock indicators were lower. The Standard & Poor’s 500 index was down 1.40 points, or 0.1%, at 1,446.99, and the Nasdaq composite index fell 5.28 points, or 0.2%, to 2,470.60.
The Russell 2,000 index of smaller companies was down 2.73 points, or 0.3%, at 806.69. The index surpassed the 800 mark for the first time last week and hit an intraday high of 810.49 on Monday before paring gains.
Treasuries largely shrugged off the Institute of Supply Management numbers. The yield on the 10-year Treasury note fell to 4.80% from 4.82% on Friday.
Also squeezing stocks was a rebound in oil prices to near $60 per barrel as a cold snap hit the Northeast. However, oil reversed course and a barrel of light sweet crude was down 28 cents at $58.74 on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, and gold futures rose $4.70 an ounce to $650.90.
Linda Dussel, market strategist for Pittsburgh-based Federated Investors, said the main question for investors would remain how fast the economy was growing. She said the answer could come this spring as economists begin to get a better handle on the state of the housing market, which typically begins to heat up toward spring.
“I think the market is going to move depending on whether there’s a growth scare or not, or enough of a slowdown that we think the Fed is out of the way,” she said. “We’ve had pretty good quarterly earnings come through, and there’s nothing in the outlooks that has the market wanting more.”
In other market highlights:
* Wal-Mart rose 44 cents to $48.52 after it announced that same-store sales, or those from stores open at least a year, topped its previous forecast of a 1% to 2% gain. The retailer said colder temperatures in January drove sales of seasonal items.
* Triad Hospitals agreed to go private in a $4.7-billion deal with affiliates of CCMP Capital Advisors and Goldman Sachs affiliate GS Capital Partners. Shares surged $6.38, or 14.7%, to $49.65.
* Billionaire financier Carl Icahn made a $2.43-billion offer for auto parts supplier Lear. Shares jumped $3.97, or 11.5%, to $38.64.
* Vornado Realty Trust raised its offer for building owner and manager Equity Office Properties Trust to $23.24 billion. Vornado fell 25 cents to $125.10, and shares of its target rose 8 cents to $55.46.
* State Street shares fell $4.67, or 6.4%, to $67.08 after the institutional investment manager said it would buy Investors Financial Services for about $4.5 billion in stock. The deal, which comes as rivals Mellon Financial and Bank of New York plan to combine, sent shares of IFS up $12.85, or 27.4%, to $59.80.
* IPod maker Apple and Apple Corps, the guardian of the Beatles’ music, resolved their long dispute Monday about who has the right to the Apple trademark. It could be the first step in permitting downloads of the band’s music. Apple shares fell 81 cents to $83.94.
* Humana gained 52 cents to $57.84. The health insurance company that staked its future on U.S.-funded benefits said fourth-quarter profit more than doubled as enrollment increased in its Medicare plans for older Americans.
* Micron Technology fell 4 cents to $13.12. The biggest U.S. memory chip maker was lowered to “hold” from “buy” by analyst John Lau at Jefferies & Co. based on chip oversupply and weakening prices.
* Royal Caribbean Cruises fell $2.33 to $43.51. The world’s second-largest cruise operator’s profit forecast and fourth-quarter earnings of 22 cents a share trailed analyst estimates.
* Overseas, Japan’s Nikkei stock average closed down 1.2%. At the close, Britain’s FTSE 100 was up 0.1%, Germany’s DAX index fell 0.2%, and France’s CAC-40 was up 0.1%.
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Bloomberg News was used in compiling this report.
