Stocks ease despite deals
The stock market retreated modestly in wobbly trading Thursday as investors put their buying spree on hold to ponder mixed economic news. The Dow Jones industrial average briefly surpassed 13,500 for the first time before pulling back.
Reports issued Thursday showed strength in some areas of the economy, particularly employment, but weakness in others -- providing little insight into whether the Federal Reserve is likely to cut interest rates this year.
Among Thursday’s positive news, new unemployment claims fell for the fifth straight week and the Philadelphia Fed’s May manufacturing index was up more than anticipated. But the Conference Board’s April index of leading indicators fell more than expected, in part because of a plunge in building permits.
The result was a fairly directionless day on Wall Street.
A speech Thursday by Federal Reserve Chairman Ben S. Bernanke in Chicago also offered little reason to buy stocks. He acknowledged that mortgage defaults and foreclosures were increasing but said they would not damage the economy.
“The market’s kind of on this monotonous grind higher, and you’ll have days where you have a pause in the marketplace,” said John O’Donoghue, co-head of equities at Cowen & Co. “But it doesn’t seem like we’re going to have a correction anytime soon.”
Although takeover activity helped push the Dow up 1,200 points in the last two months, news of multibillion-dollar buyouts of Alliance Data Systems and Acxiom had little effect Thursday.
The Dow fell 10.81 points, or 0.1%, to 13,476.72, after rising as high as 13,516.71. On Wednesday, the index reached its 23rd record close of the year.
Broader indexes also declined. The Standard & Poor’s 500 index lost 1.39 points, or 0.1%, to 1,512.75, and the Nasdaq composite index fell 8.04 points, or 0.3%, to 2,539.38.
The Russell 2,000 index of smaller-company stocks fell 4.56 points, or 0.6%, to 815.64.
Declining stocks outnumbered advancers by 5 to 3 on the New York Stock Exchange.
Bond yields jumped in the wake of the unemployment data. The yield on the benchmark 10-year Treasury note rose to 4.75% from 4.71% late Wednesday.
Oil prices rebounded sharply on supply fears in anticipation of the summer driving season. Crude futures rose $2.31 to $64.86 a barrel in New York.
The dollar rose against other major currencies, while gold prices fell.
Although stocks may slide in the near term as investors cash in profits, the long-term outlook for stocks is positive, many market watchers say. One reason for optimism is the perception of an abundance of cash in the marketplace, as evinced by the recent slew of takeover deals.
After their buyout accords were announced, shares of credit card service provider Alliance Data Systems, which is being acquired by Blackstone Group, soared $15.50, or 25%, to $78.46, and data management company Acxiom, which agreed to a buyout by two private equity firms, surged $4.28, or 18%, to $27.95.
In other market highlights:
* Real estate investment trust shares continued their slide, pushing a Bloomberg index of 131 REIT stocks down 1.8% to 252.89, its lowest closing level since November. The index has tumbled 14.2% from its record high reached in February.
Public Storage slumped $2.44 to $83.74, Boston Properties fell $2.54 to $109.76 and Kilroy Realty was down $1.46 to $70.25.
* J.C. Penney posted better-than-expected first-quarter earnings and raised its profit outlook for the year. The retailer climbed $4.02, or 5.3%, to $79.74.
* Intuit rose as much as $1.86, or 6.5%, to $30.54 in late trading after its earnings topped estimates and the software firm said it would buy back as much as $800 million of stock over three years. In regular trading, Intuit fell 28 cents to $27.72.
* Sun Microsystems late Wednesday said it would repurchase as much as $3 billion of stock. Sun gained 18 cents, or 3.5%, to $5.30.
* Apple won U.S. regulatory approval of its iPhone. Apple rose $2.10, or 2%, to $109.44.
* Boeing reached a tentative accord that would avoid a strike by its machinists. The aerospace manufacturer increased $1.45, or 1.5%, to $96.79, after hitting an all-time high of $97.18.
* Dusa Pharmaceuticals soared $1.99, or 72%, to $4.76 after regulators granted advantageous status to its Levulan therapy to treat esophagus damage.
* Overseas, key indexes fell 0.2% in Japan and rose 0.3% in Britain and 0.2% in Germany. France’s CAC-40 advanced 0.2%.
