Dow within sight of 14,000
Blue-chip stocks Monday added to their huge gains last week, sending the Dow Jones industrials to another record close and putting it within sight of the 14,000 level.
But the stock market overall was broadly lower as some investors pulled back after last week’s surge and housing-related stocks lost ground. Losers outnumbered winners by more than 2 to 1 on the New York Stock Exchange.
The Dow added 43.73 points, or 0.3%, to a record 13,950.98, helped by Verizon Communications, which gained $1, or 2.4%, to $42.76 on rumors that Britain’s Vodafone Group might bid as much as $160 billion for the U.S. telecom giant.
Vodafone denied the rumor, but it whetted investors’ appetite for more mega-deals, analysts said. Vodafone fell 37 cents, or 1.1%, to $33.15.
“I think just the idea of the number floated -- $160 billion -- gets the juices running in the market again,” said Greg Church, chief investment officer of Church Capital Management in Yardley, Pa., referring to last week’s gains.
“It would be the biggest deal ever. People want to be at the party and they don’t want to miss it.”
Also helping the Dow, construction equipment maker Caterpillar rose 77 cents to a record $85.90, its sixth straight gain. United Technologies, another Dow stock, rallied $1.67, or 2.2%, to a record $76.67.
Broader stock indexes declined, however. The Standard & Poor’s 500 slipped 2.98 points, or 0.2%, to 1,549.52, after reaching a record high Friday.
The Nasdaq composite fell 9.67 points, or 0.4%, to 2,697.33. The Russell 2000 index of smaller companies fell 7.30 points, or 0.8%, to 848.47.
Bond yields fell, with the yield on the benchmark 10-year Treasury note dropping to 5.04% from 5.10% late Friday.
The dollar continued to slide against some key currencies. One U.S. dollar bought 1.043 Canadian dollars Monday, down from 1.048 on Friday and the least since 1977. The British pound rose to $2.037, up from $2.034 Friday and the highest value for the pound in 26 years.
Oil prices rose. Crude futures climbed 22 cents to $74.15 a barrel, an 11-month closing high, on the New York Mercantile Exchange.
In other takeover news, restaurant chain operator IHOP said it would acquire Applebee’s International for about $1.9 billion. Applebee’s rose 53 cents, or 2.2%, to $24.91, while IHOP jumped $4.99, or 8.9%, to $61.24.
Con-way climbed $3, or 5.7%, to $56.06 after the trucking company agreed to acquire privately held carrier Contract Freighters for $750 million.
Church contends the stock market’s gains are on solid footing, adding that if the number of deals slow markedly or if one unravels because of an inability to obtain financing, the overall stock market probably would pull back.
“As you keep ratcheting this up on more and more speculation at some point it does get a little frothy, but we’re not there yet,” he said, referring to the stock market’s gains.
“I think when this might pop is where one of these big deals can’t get financing. Then the game is done.”
In other market highlights:
* Among housing- and mortgage-related issues, Countrywide Financial fell $1.42, or 3.9%, to $34.84, KB Home dropped 63 cents, or 1.7%, to $36.80 and home-improvement retailer Lowe’s fell 59 cents, or 1.9%, to $30.17.
ACA Capital Holdings plunged for a second session, dropping $1.87, or 22%, to $6.59. Credit Suisse Group analysts reported that the provider of asset management and credit protection products had $4.5 billion in exposure to sub-prime mortgages from 2006 and 2007. ACA declined to comment.
* Coca-Cola gained 74 cents, or 1.4%, to $53.85, a multiyear high, ahead of its quarterly earnings report due today.
* Mattel rose 67 cents, or 2.5%, to $27.20 after reporting a 15% increase in second-quarter earnings, saying higher foreign sales of its Barbie dolls and Hot Wheels toy cars made up for soft U.S. sales.
* Ford Motor fell 11 cents, or 1.2%, to $8.86 after denying reports that it was in talks to sell its Volvo division.
* IBM gained $1.06, or 1%, to $109.66, its highest price since 2002. The No. 1 computer-services provider won a $1.4-billion contract to manage information technology for British drug giant AstraZeneca.
* DJO soared $8, or 19%, to $50.10 after ReAble Therapeutics, a medical device maker controlled by Blackstone Group, agreed to acquire the Vista, Calif., sports medicine company for $1.18 billion in cash. Blackstone fell 16 cents to $29.69.
* Syntax-Brillian surged $1.05, or 19%, to $6.61. The maker of high-definition televisions raised its forecast for the year, citing strong demand for its Olevia brand high-definition TVs.
* Trident Microsystems slid $1.26, or 7%, to $16.80. The maker of chips used in HDTVs received a delisting notice from Nasdaq.
* Hudson Highland Group plummeted $4.95, or 22%, to $17.07 after the staffing-services firm warned that its second-quarter revenue would fall short of forecasts.
* In overseas trading, key stock indexes fell 0.3% in Britain, 0.6% in Hong Kong and 2.4% in Shanghai. Indexes rose 0.2% in Germany and 0.1% in France. Japan’s Nikkei average ended flat.
