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Stocks Hold to Modest Gains

Mike Taylor

U.S. stocks were off their highs but keeping it just barely positive Monday as investors contemplated encouraging earnings from Bank of America (BAC Quote) and a new merger in the pharmaceutical space.

The Dow Jones Industrial Average was roughly flat at 11,494, and the S&P 500 added half a point to 1261. The Nasdaq gained 3 points to 2286.

As for corporate news, Swiss pharmaceutical company Roche made a $43.7 billion offer for the rest of Genentech (DNA Quote). Roche is already a 56% shareholder in the maker of cancer drug Avastin. Genentech shares jumped 13% on the news.

Yahoo! (YHOO Quote) was another headliner, as the company agreed to give investor Carl Icahn, who wanted the Internet portal owner to work a deal with Microsoft (MSFT Quote), a seat on its board. Yahoo! stock was edging downward.

In the earnings department, Bank of America posted second-quarter earnings of $3.41 billion, or 72 cents a share, down from $5.76 billion, or $1.28 a share, in the same quarter last year. Revenue, however, rose and topped expectations, as did profits. BofA also believes it will make money this year from the Countrywide Financial takeover. Shares were climbing 10%.

Merck (MRK Quote) and Schering-Plough (SGP Quote), originally slated to report Monday morning, are delaying their statements until after the market close to provide an update from a study on their joint venture, Vytorin. Merck lost 4.8%, and Schering-Plough tumbled 11%.

After the close, traders will also get results from Dow component American Express (AXP Quote), as well as Apple (AAPL Quote) and Texas Instruments (TXN Quote).

Away from earnings, government-sponsored entity Freddie Mac (FRE Quote), hamstrung by the credit crisis, may stop buying as many home loans and bonds backed by housing debt in an effort to raise capital. Freddie was climbing 8.6%.

In technology, XM Satellite Radio (XMSR Quote) said it added 322,000 new subscribers in the second quarter, a 17% year-over-year increase. The company also announced a $400 million offering of senior notes to help refinance debt pending an intended merger with Sirius Satellite Ratio (SIRI Quote). Shares of both companies were on the rise.

In commodities, crude oil was gaining $1.17 to $130.05, and gold was up $6.60 at $964.60.

Looking at economic data, the Conference Board's leading index fell 0.1% in June, a move that was in line with expectations. The May leading indicators index was revised to a 0.2% decline from an increase of 0.1%.

Long-dated treasuries were lower. The 10-year was down 4/32 in price, yielding 4.1%, and the 30-year was off 6/32, yielding 4.66%. The dollar was slipping against the euro, even with the yen and stronger vs. the pound.

Abroad, European indices were mostly higher, while the Asian markets were mixed. The FTSE in London and the DAX in Frankfurt were both advancing, as was the Hang Seng in Hong Kong. Japan's Nikkei edged downward.