Investors burdened by angst about upcoming earnings reports shrugged off a spate of mergers and acquisitions news Monday, leaving stocks with only modest gains.
A flurry of merger activity — a buyout of video rental chain Hollywood Entertainment Corp., reported merger talks between Wells Fargo & Co. and British financial giant Barclays PLC and a deal in the wireless telephone sector — was seen as a sign that the economy would remain strong enough to support such deals.
That helped take the edge off of oil prices, which topped $47 per barrel for the first time since Dec. 1 before falling substantially in late trading. A barrel of light crude settled at $45.33, down 10 cents, on the New York Mercantile Exchange.
But while the markets rose in somewhat uncertain trading, analysts said earnings reports were foremost on investors’ minds — especially corporate profit outlooks for 2005, which could include how companies feel about the prospects for inflation.
“We’re doing all right for now, but earnings will really determine where we’re going to go,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. “And the key with earnings will be guidance for 2005. How concerned is corporate America about inflation? That’s the big question.”
The Dow Jones industrial average rose 17.07, or 0.16 percent, to 10,621.03.
Broader stock indicators were moderately higher. The Standard & Poor’s 500 index was up 4.06, or 0.34 percent, at 1,190.25, and the Nasdaq composite index gained 8.43, or 0.4 percent, to 2,097.04.
A Commerce Department report showed that wholesale inventories rose by 1.1 percent in November. Economists expected inventories to rise just 0.7 percent, slightly less than the 1.1 percent climb in October. But the report didn’t affect stock trading; analysts saw the rising inventories as companies hedging against economic uncertainty, particularly rising wholesale prices and possible inflation.
Inflation likely will continue to be a critical concern on Wall Street through earnings season, as companies discuss their forecasts for 2005. If companies are concerned that interest rates will rise quickly in response to a falling dollar and mounting inflationary pressures, then stocks could fall, putting a definitive end to the markets’ postelection rally that sagged last week.
Advancing issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange, where preliminary consolidated volume came to 1.87 billion shares, compared with 1.86 billion on Friday.
The Russell 2000 index of smaller companies was up 4.53, or 0.74 percent, at 617.74.
Overseas, markets in Japan were closed for a national holiday. In Europe, Britain’s FTSE 100 closed down 0.28 percent, France’s CAC-40 was flat for the session, and Germany’s DAX index fell 0.21 percent.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.