S&P; inches close to record
U.S. stocks finished mostly higher Monday amid a continuing stream of takeover news, pushing the Standard & Poor’s 500 index briefly above its 7-year-old record close.
Seen by many as the best gauge of the U.S. stock market, the S&P; 500 surpassed the 1,527.46-point mark at mid-session, reaching as high as 1,529.87, before falling back to close at 1,525.10 points, up 2.35, or 0.2%.
The index stayed well below its all-time trading high of 1,552.87 set on March 24, 2000, the same day it reached its record close.
Among the proposed acquisitions signaling that takeover activity could maintain its record pace this year, General Electric confirmed that it was selling its plastics division to Saudi Arabia’s largest industrial company, Saudi Basic Industries Corp., for $11.6 billion.
The GE announcement followed news Sunday that telecommunications company Alltel had agreed to be bought for $24.8 billion, and that China’s new state investment company was investing $3 billion in giant private equity firm Blackstone Group. Blackstone, meanwhile, said Monday that it was expanding the size of its planned initial public offering to $4.75 billion.
The Dow retreated modestly after venturing further into record territory earlier in the day. The blue-chip index fell 13.65 points, or 0.1%, to 13,542.88 after hitting an intraday high of 13,586.03.
The Nasdaq composite index surged 20.34 points, or 0.8%, to 2,578.79, after reaching a six-year high of 2,587.87. The index rose as Amazon.com stock saw big gains and as investors bought up small-cap stocks, which have been trailing large-cap stocks this year.
The Russell 2,000 index of smaller companies rose 9.99, or 1.2%, to 833.65 after hitting an intraday high of 837.19. It is still below its record close of 834.77 reached May 9.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange.
In early 2000, all the major stock market indicators reached record highs, only to be dragged down by the end of the dot-com boom, a recession, 9/11 and a series of corporate scandals including the collapse of Enron. The S&P; 500 fell to a low of 776.76 in October 2002.
The market recovered slowly. It wasn’t until last October that the more widely recognized Dow surpassed its 2000 closing high. And after 24 record closes for the Dow this year, the S&P; has just tasted what would be its first record close in more than seven years.
“This is new territory, but more importantly it serves as a reminder that the three broad indices are doing well. That should be the focus,” said Arthur Hogan, chief market analyst at Jefferies & Co.
Nasdaq is unlikely to reclaim its record close of 5,048.62 anytime soon. The tech-dominated index was overinflated by investors eager to grab any high-tech stock.
Bonds yields fell Monday. The yield on the benchmark 10-year Treasury note slipped to 4.78% from 4.80% late Friday. The dollar gained against other major currencies, and gold prices rose.
Crude oil soared $1.33 to $66.27 a barrel on the New York Mercantile Exchange.
After two private equity firms said they were buying Alltel, the No. 5 U.S. wireless company rose $4.39, or 6.7%, to $69.60.
In a day that was sluggish for many technology stocks, the standout was Amazon, the biggest gainer on the S&P; 500 and Nasdaq. A Citigroup analyst raised his price target after the Internet retailer said it would offer online music without copy protection technology. Amazon, which hit a seven-year high, closed at $68.30, up $5, or 7.9%.
In other market highlights:
* Westlake Village-based ValueClick may have several companies interested in acquiring the second-biggest Internet ad broker, including Microsoft, according to ThinkEquity Partners. ValueClick shares soared $4.29, or 14%, to $34.29.
* Dow Jones fell $1.85, or 3.5%, to $51.10. Analysts at Pali Research said News Corp. might be preparing to walk away from a $5-billion bid for the publisher of the Wall Street Journal after failing to win the support of the Bancroft family, which controls Dow Jones.
* Elan jumped $2.09, or 13%, to $18.69, and Wyeth climbed $2.03, or 3.6%, to $58.41. The drug makers are planning advanced trials of a drug called bapineuzumab to fight Alzheimer’s disease.
* Cytyc rocketed $7.95, or 23%, to $43, and Hologic slumped $3.61, or 6.3%, to $54 after Hologic agreed to acquire Cytyc for $6.2 billion. Both are women’s healthcare technology firms based in Massachusetts.
* Dendreon soared 73 cents, or 12%, to $6.80 after the company said a new report suggested its drug Provenge prolonged the life of prostate cancer patients by nine months.
* EGL rose $1.67, or 3.7%, to $46.94. The freight-management company said a group led by Apollo Management had raised its offer to $47.50 a share from $46, topping a bid by EGL’s chief executive.
