Wall Street finished little changed Monday as investors turned cautious ahead of the Federal Reserve’s two-day policy meeting, which starts today.
Stocks advanced for most of the session, then pulled back modestly in the final minutes of trading.
Investors’ appeared to be waiting for the Fed to make the next move. Policymakers are widely expected to cut interest rates by a quarter-point Wednesday, then leave them steady for the balance of the year to help ward off inflation.
The session’s modest moves came despite one of the most active days for acquisitions in almost three months. The biggest deal was the offer by Warren Buffett and candy maker Mars to buy chewing gum maker Wm. Wrigley Jr. for about $23 billion in cash, sending Wrigley stock soaring $14.46, or 23.2%, to $76.91.
Meanwhile, billionaire Kirk Kerkorian plans to make an offer that would expand his stake in Ford Motor to 5.6%, saying he sees signs the automaker’s turnaround plan is working.
This helped to offset disappointment in the market that struggling Continental Airlines said it would not pursue a combination with another carrier right away. It was a surprising move after weeks of speculation it would join with United Airlines to create the world’s biggest carrier.
But investors appeared focused on the Fed.
“Investors are holding their breath for the Fed, and not even these high-profile deals are shaking people off of their hands,” said Jack A. Ablin, chief investment officer at Harris Private Bank. “The direction of Fed policy hangs in the balance, and there are people like me that hope the central bank quits sooner rather then later.”
The Dow Jones industrial average fell 20.11 points, or 0.2%, to 12,871.75.
Broader indexes were mixed. The Standard & Poor’s 500 index slipped 1.47 points, or 0.1%, to 1,396.37, and the Nasdaq composite index rose 1.47, or 0.1%, to 2,424.40.
Bond prices edged higher after big losses last week. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.83% from 3.87% late Friday.
Crude oil spiked to near $120 a barrel in overnight trading amid supply concerns, then gave up some gains to settle up 23 cents at $118.75 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, with the euro down 0.005 to $1.559 against the dollar. Gold prices rose $5.70 to $892.90.
In corporate news, Kerkorian’s investment company, Tracinda, said it planned to offer $8.50 a share in cash for up to 20 million additional shares of Ford. Ford rose 71 cents, or 9.5%, to $8.21.
Continental Airlines shares fell 26 cents to $16.96 after the company said it wasn’t interested in a merger. The decision stunned United’s parent, UAL, which had been in advanced talks and expected to complete a deal by early May. United shares fell 40 cents, or 2.6%, to $14.81.
Some observers saw the deal-making as an encouraging sign that companies were still willing to make mergers and acquisitions happen -- and that many might do so while valuations look cheap.
“What is happening is that people are thinking the Fed is keeping the economy going, and this is a good opportunity to do some inexpensive shopping,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group.
In other corporate news, health insurer Humana said increased Medicare Advantage membership helped drive first-quarter profit above Wall Street’s expectations. The company also raised its forecast for the year. The stock rose $1.50, or 3.3%, to $46.38.
Visa, the world’s largest credit and debit card processor, said after the closing bell Monday that its earnings increased 28% in the first quarter as customers charged more purchases. Investors appeared disappointed that Visa’s results weren’t stronger. The stock fell more than 4% in after-hours trading, after rising 53 cents to finish the regular session at $75.63.
The Russell 2,000 index of smaller companies advanced 3.49, or 0.5%, to 725.37.
Overseas, Japan’s Nikkei stock average rose 0.2%. Britain’s FTSE-100 was unchanged, Germany’s DAX added 0.4% and France’s CAC-40 rose 0.7%.