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U.S. Stocks Mount Midday Turnaround to Close Higher, Bank of America Plunges

NEW YORK (TheStreet) -- U.S. stocks rallied midday Monday to close higher, while shares of banking giant Bank of America (BAC - Get Report) plunged on a capital blunder.

The U.S. and European Union have imposed additional sanctions on several Russian and Ukrainian individuals.

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  • The Dow Jones Industrial Average settled up 0.53% at 16,448.74, while the S&P 500 added 0.32% to 1,869.42. The Nasdaq dipped 0.03% to 4,074.40.
  • Bank of America tumbled 6.3% to $14.95 a share after the company said it would halt buybacks and dividend hikes due to capital planning mistakes. "While we do not anticipate the actual net effect on BAC's capital or EPS will be overly material, we believe the combination of reputational damage, upward pressure on expenses and potentially more conservative capital return request in 2015 will cloud BAC's share price performance for the next few months," wrote Wells Fargo analyst Matt Burnell.
  • U.S. home buyers purchased more existing homes in March, with an index of pending home sales up 3.4% from February to 97.4, the first gain in nine months, according to the National Association of Realtors. The result still remains 7.9% lower than a year earlier. "The March report suggest existing home sales may stabilize and turn higher in the coming months," Barclays analysts told clients.
  • This month's Federal Reserve policy announcement will be made on Wednesday following a two-day meeting. The Federal Open Market Committee is unlikely to make meaningful changes to its policy statement as it looks through the likely 1% quarter-over-quarter annualized pace of growth in the first quarter of 2014, Dominic Bryant, senior global and structural economist at BNP Paribas, said in a note.
  • Pfizer (PFE) shares increased 4.2% and AstraZeneca (AZN) surged 12.2% after Pfizer confirmed that it contacted AstraZeneca on April 26 seeking to renew discussions about the possibility of buying the latter for a possible $98.7 billion.
  • European markets were broadly higher after news of the deal. The FTSE 100 was up 0.21% while the DAX in Germany climbed 0.47%. In Asia, the Hang Seng closed 0.41% lower while the Nikkei was off 0.98%.
  • In other M&A news, Susser Holdings (SUSS) soared 36.3% after agreeing to be bought by Energy Transfer Partners (ETP) in a deal worth about $1.8 billion.
  • Furiex Pharmaceuticals (FURX) jumped 28.6% after the announcement it had entered an agreement to be acquired by Forest Laboratories (FRX) for $1.1 billion in cash.
  • Comcast (CMCSA) closed higher after the announcement that it would divest systems resulting in a loss of about 3.9 million video customers as part of its proposed merger with Time Warner Cable (TWC). Charter Communications (CHTR) will acquire about 1.4 million existing Time Warner Cable subscribers.
  • General Electric (GE) tilted higher by 0.68% to $26.78 a share after reports it was in further discussions over its offer for French company Alstom.
  • Newmont Mining(NEM) shed 6.7% after reports it had stopped talks with Barrick Gold (ABX) on a takeover.
  • Geopolitical tensions remain elevated in the face of the Ukraine crisis. The White House said Monday that new sanctions on Russia would target individuals and 17 companies, including two banks. "The United States, working closely with its partners, remains prepared to impose still greater costs on Russia if the Russian leadership continues these provocations instead of de-escalating the situation," the statement said. The European Union imposed sanctions on 15 more Russians and Ukrainians, bringing the total number of individuals targeted by the EU over the Ukraine crisis to 46.

-- By Jane Searle, Andrea Tse and Joe Deaux in New York

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Chart of I:DJI
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S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

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