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Stocks Fail to Find Footing

Robert Holmes

Wall Street was directionless for the entire session Monday as a spate of merger-and-acquisition activity did little to entice nervous investors.

The Dow Jones Industrial Average gained 8.25 points, or 0.07%, to 12,661.74, while the Nasdaq Composite was off 5.28 points, or 0.21%, at 2470.60. The S&P 500 was lower by 1.40 points, or 0.1%, at 1446.99.

"The bulls have a lot to celebrate and enter the week partying in new high territory," said Ken Tower, chief market strategist with CyberTrader. "Only tech-heavy sectors like the Nasdaq have failed to jump on the new-high bandwagon. This is problematic since the Nasdaq has a history of leading the overall market, but it's too early to panic."

On the Dow, Hewlett-Packard (HPQ Quote) was the best performer, rising 1.8%. However, that gain was offset by Microsoft (MSFT Quote), which fell by 1.8%.

Akamai Technologies (AKAM Quote) was one of the best performers on the Nasdaq, rising 4.6%. On the other hand, Google (GOOG Quote) shed 3%.

Roughly 1.93 billion shares changed hands on the New York Stock Exchange. Decliners beat advancers by a 9-to-7 margin. Volume on the Nasdaq topped 1.91 billion shares, with losers outpacing winners 3 to 2.

Several merger deals made headlines, including a plan by State Street (STT Quote) to acquire Investors Financial (IFIN Quote) for roughly $4.5 billion. State Street shed 6.5%, while Investors Financial surged 27.4% to $59.80.

Another arrangement will see Triad Hospitals (TRI Quote) taken private by affiliates of CCMP Capital Advisors and GS Capital Partners in a $4.7 billion acquisition. Shares of Triad Hospitals jumped $6.38, or 14.7%, to $49.65.

Elsewhere, Simon Property (SPG Quote) and Farallon Capital have bid $24 a share for Mills (MLS Quote), topping by $3 the price of a deal with Brookfield Asset Management (BAM Quote).

Simon tacked on 1.1% to $116.27, Mills surged 16.8% to $25.87, and Brookfield gained 2.1% to $49.88.

Meanwhile, auto-parts makerLear (LEA Quote) jumped 11.5% after billionaire investor Carl Icahn's American Real Estate Partners made an offer to buy the company for $36 a share. Lear gained $3.97 to $38.64.

Turning to the day's research calls, Credit Suisse upgraded Dell (DELL Quote) to outperform from neutral and raised its price target by $3 to $28. Shares closed up 38 cents, or 1.6%, at $23.90.

Deutsche Bank downgraded Chevron (CVX Quote) to sell from hold and cut its price target to $65 from $67, but CIBC lifted its target on the oil giant to $82 from $73. Chevron lost 26 cents, or 0.4%, to $73.78.

Over the weekend, Dow component Wal-Mart (WMT Quote) said that January same-store sales rose 2.2%, coming in higher than the retailer's prior forecast of a 1% to 2% gain. Wal-Mart added 44 cents, or 0.9%, to $48.52.

Among earnings reports, Humana (HUM Quote) said it had a fourth-quarter profit of $155 million, or 92 cents a share, more than doubling from the year-ago quarter. The health insurance group beat the Thomson First Call average estimate by 4 cents, and its shares rose 52 cents, or 0.9%, to $57.84.

Chipmaker KLA-Tencor (KLAC Quote) traded higher after reporting fiscal second-quarter earnings of $90 million, or 44 cents a share, a rise of nearly 16% from a year ago. Revenue jumped to $649.3 million from $487.7 million. While both results and revenue missed Wall Street's targets, the stock finished higher by $1.29, or 2.6%, to $51.29.

Commodities pulled back from intraday highs. Oil futures relinquished early gains and finished down 28 cents at $58.74 a barrel, while natural gas gained 16 cents at $7.63 per million British thermal units. Gold climbed $4.60 to $656.10 an ounce, and silver ended up 18 cents to $13.55 an ounce.

In the day's only economic release, the Institute for Supply Management said its services index rose to a reading of 59.0 last month from 56.7 in December. Economists expected the index to rise to 57.0.

"Sales were very strong in November and December as a result of the plunge in gas prices, which gave consumers a huge cash windfall just before the holidays," said Ian Shepherdson, chief economist with High Frequency Economics. "They spent most of the money, and that's why the ISM nonmanufacturing index is so strong now."

However, Shepherdson warned that "as sales growth slows in the current quarter, the index will come back down."

Treasury prices moved up. The 10-year gained 4/32 in price and was yielding 4.80%, and the 30-year bond added 3/32, yielding 4.91%.

Overseas, Frankfurt's Xetra DAX eased 0.2% at 6874, and London's FTSE rose 0.1% at 6318. Tokyo's Nikkei sank 1.2% overnight to 17,344, and Hong Kong's Hang Seng slid 0.5% to 20,455.