Mixed day for stocks after early rally wanes
The stock market finished narrowly mixed Monday after an early rally on news of a possible $5-billion private equity investment in a big mortgage lender fizzled.
Shares initially popped higher on reports that Washington Mutual, the country’s largest thrift, was in discussions about selling a stake to a group led by buyout shop TPG.
But investors decided to play it safer later in the day as they looked forward to first-quarter earnings reports and the release today of the Federal Reserve’s minutes from its March meeting.
In fact, Alcoa was the biggest loser among the 30 Dow Jones industrials -- even before it released its quarterly financial data after the close of the market.
The broader market started pulling back when the Standard & Poor’s 500 index began approaching the level where it stood before Wall Street’s massive sell-off in early March, said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.
But stocks largely held on to their big gains from last week, even as Martin Feldstein, chief executive of the National Bureau of Economic Research, said he believed the American economy had been slipping into recession since January.
The bureau, considered the official arbiter of when recessions begin and end, has not actually declared the start of one and normally is not able to do so until after the downturn is over.
The Dow edged up 3.01 points to 12,612.43, after being up more than 120 points earlier in the session. Last week, the average gained 393.02 points, or 3.2%.
The S&P; 500 closed up 2.14 points, or 0.2%, at 1,372.54. The Nasdaq composite index fell 6.15 points, or 0.3%, to 2,364.83.
The Russell 2,000 index of smaller companies fell 1.05 points, or 0.1%, to 712.68.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange.
Government bond yields rose. The benchmark 10-year Treasury note climbed to 3.54% from 3.47% late Wednesday.
Oil futures rose $2.86 to $109.09 a barrel on the New York Mercantile Exchange. Gold prices also advanced, and the dollar fell against the euro currency.
Alcoa fell $1.56, or 4%, to $37.44 before reporting that its first-quarter profit dropped 54%, more than expected. Its shares were little changed in after-hours trading.
But there were many signs during the day that Wall Street was feeling more optimistic.
Washington Mutual shares shot up $2.98, or 29%, to $13.15 on news that it might sell a large minority stake to a private equity group.
The news boosted other financial stocks as well.
Merrill Lynch climbed $1.30, or 2.8%, to $47.55. Goldman Sachs rose $3.33, or 1.9%, to $178.73.
In other deal news, Discover Financial Services said it was buying the Diners Club International card network from Citigroup for $165 million. Discover rose 95 cents, or 5.5%, to $18.09, while Citigroup advanced 52 cents, or 2.2%, to $24.60.
Swiss pharmaceutical maker Novartis said it would spend $39 billion in a two-step bid for a majority stake in Alcon. The U.S. eye-care company’s shares rose $2.19, or 1.5%, to $150.63, and Novartis fell $2.12, or 4.1%, to $50.
Microsoft gave Yahoo a three-week deadline to agree to a takeover, threatening a proxy fight for control of the Web company if a deal wasn’t reached by then.
Yahoo said the deal wasn’t in the best interests of its shareholders and called Microsoft’s proxy-fight threat counterproductive. Yahoo fell 66 cents, or 2.3%, to $27.70, while Microsoft closed flat at $29.16.
In other market highlights:
* Apple rose $2.81, or 1.9%, to $155.89 after the stock was upgraded by an analyst at Thomas Weisel Partners.
* Overseas, key stock indexes rose 1.2% in Japan, 1.1% in Britain and 0.9% in Germany and France.