Markets mixed on acquisition news
Wall Street zigzagged through a listless session Monday, closing mostly higher as a spate of acquisitions lifted the technology sector and energy prices extended their declines. The gains were limited by airline woes and worries about interest rates.
Monday’s $12 billion in merger activity signaled optimism on Wall Street two weeks after Hurricane Katrina’s devastation of the Gulf Coast threatened the U.S. economy, but the market treaded water while waiting to see if the Federal Reserve raises rates yet again at next week’s meeting. Analysts are split over the Fed’s action, with some saying policymakers will stay on course while others believe rates should stay unchanged to fend off an economic retreat.
Investors felt some relief as oil and gasoline futures sank, pulled lower by reports that efforts to resume production are progressing after Katrina brought much of the Gulf Coast to a standstill. A barrel of light crude fell 74 cents to $63.34 on the New York Mercantile Exchange, where gasoline futures also slipped 9 cents to $1.87 a gallon.
The tech sector rallied on news that software maker Oracle Corp. plans to acquire rival Siebel Systems Inc. and online auctioneer eBay Inc. is buying Internet-telephone firm Skype Technologies SA for a combined $8.45 billion. Wachovia Corp. also agreed to acquire car-financing firm Westcorp.
At the close of trading, the Dow Jones industrial average gained 4.38, or 0.04 percent, to 10,682.94.
Broader stock indicators were mixed. The Standard & Poor’s 500 index dropped 0.92, or 0.07 percent, to 1,240.56, while the Nasdaq composite index climbed 7.32, or 0.34 percent, to 2,182.83.
Declining issues outpaced advancers by about 6 to 5 on the New York Stock Exchange, where preliminary consolidated volume of 1.93 billion shares fell short of the 1.98 billion shares traded Friday.
Bonds ended lower, with the yield on the 10-year Treasury note jumping to 4.18 percent from 4.12 percent on Friday. The dollar was mixed against most major currencies in European trading, while gold prices inched up.
Wall Street has been speculating about the Fed’s rate policy, with many hoping the central bank will halt its string of 10 consecutive quarter-point raises to the nation’s benchmark interest rate in order to keep lending costs lower while the Gulf Coast rebuilds.
“I think we’re coming to the end of it,” Rick Meckler, president of LibertyView Capital Management, said of the Fed’s rate increases. “The rise of energy prices and the general impact of the hurricane would make it dangerous for the Fed to push rates higher and higher.”
The Russell 2000 index of smaller companies rose 2.77, or 0.41 percent, to 680.82.
Overseas, Japan’s Nikkei stock average climbed 1.61 percent. Britain’s FTSE 100 was up 0.29 percent, Germany’s DAX index declined 0.32 percent, and France’s CAC-40 finished unchanged.