Stocks resume losses amid collapse of deals
Wall Street extended its losses Monday as investors awaited a stream of key economic data this week and were left disappointed by the collapse of several closely watched acquisition deals.
The markets, which pulled back last week amid concern about inflation’s effect on interest rates, traded cautiously with Federal Reserve Chairman Ben S. Bernanke set to testify about the economy before Congress on Wednesday. Government data due Friday could shed light on wholesale inflation and the state of the housing market.
Unlike recent Mondays, there was a dearth of acquisition announcements to give the market a lift. Instead, investors dealt with news that Nasdaq Stock Market failed in its bid to buy the London Stock Exchange and that French drug maker Sanofi-Aventis called off talks for a possible deal with Bristol-Myers Squibb.
Onyx Pharmaceuticals and Bayer advanced after the companies released data from a clinical trial that showed an experimental drug was effective in fighting liver cancer.
Apple moved higher after being upgraded in anticipation of big product launches this year.
Wall Street fell last week amid concerns about higher oil prices and the possibility that inflation could lead to higher interest rates. With fourth-quarter earnings reports nearly over, investors have traded hesitantly as they wait for some kind of catalyst to give them direction.
“With all the data coming out, and Bernanke possibly taking a more hawkish tone, this causes the markets to be very cautious and tentative,” said Alan Gayle, senior investment strategist for Trusco Capital Management. “There’s just been a lot of nervousness going into this week, and the weak start is a carry-over from last week.”
The Dow Jones industrial average fell 28.28 points, or 0.2%, to 12,552.55.
Broader stock indicators declined. The Standard & Poor’s 500 index dropped 4.69 points, or 0.3%, to 1,433.37, and the Nasdaq composite index retreated 9.44 points, or 0.4%, to 2,450.38. Bond yields rose ahead of economic data due out this week, with the benchmark 10-year Treasury note rising to 4.80%, from 4.78% on Friday.
Oil, which advanced last week as cold weather was seen increasing heating demand, fell on the New York Mercantile Exchange.
Crude oil futures closed at $57.81 a barrel, down $2.08.
The drop caused major oil makers to tumble, with Dow industrial Exxon Mobil down 62 cents at $74.60, ConocoPhillips off 96 cents at $66.03 and Chevron lower by $1 at $72.32.
Jack Ablin, chief investment officer at Harris Private Bank, said he was disappointed about investor sentiment because there really had not been big corporate or economic news behind the retreat.
“I’m somewhat concerned that the market is tending to drift lower, and maybe there’s a slight change in sentiment out there,” he said.
Investors and analysts have been digesting economic data, speeches by policymakers and earnings reports to see whether Wall Street can continue the year-end rally of 2006.
Projections about the economy have been mixed -- and left the markets drifting this year.
One thing spooking at least some investors was the likelihood that S&P; 500 companies in the fourth quarter would break 18 consecutive quarters of double-digit earnings growth.
In addition, S&P; said, companies were falling short of earnings expectations at a pace not seen in two years.
As of Monday with nearly three-quarters of the companies in the S&P; 500 having reported their earnings, 122 of them have posted results below expectations.
In other market highlights:
* Nasdaq Stock Market tumbled $2.10 to $35.10. The company on Saturday conceded defeat in its bid to buy the London Stock Exchange.
* Shares of real estate investment trusts dropped for a third day after reaching record highs last week. A Bloomberg index of 137 REIT shares slumped 5.48 points, or 1.9%, to 284.17.
The index hit a record Wednesday after private equity firm Blackstone Group won a bidding war for REIT giant Equity Office Properties. But investors have been taking profits in REIT shares since then. The Bloomberg index is down 3.6% from its peak.
On Monday, Vornado Realty slid $1.95 to $131.39, Boston Properties plunged $3.54 to $123.50 and Public Storage dropped $2.98 to $109.42.
* Fortress Investment Group fell 75 cents to $30.25. Shares of the hedge fund and private-equity fund manager had rocketed 68% in their first trading session Friday.
* Bristol-Myers tumbled 93 cents to $27.59 after a report that Sanofi-Aventis called off deal talks amid a dispute over price.
* Apple rose $1.61 to $84.88 after it was upgraded by a Citigroup analyst. Micron Technology shed 29 cents to $12.27 after it warned prices would drop this quarter.
* Good news about a potential treatment for liver cancer sent Bayer up 62 cents to $58.45 and Onyx up $11.89, or 97%, to $24.15.
