Stocks Slip

Investors fail to follow up on Friday's rally, after a major tech deal is announced.
By Meredith Derby ,

Updated from 4:02 p.m. EST

Stocks closed slightly lower Monday afternoon, despite a major acquisition in the networking space, following a surprising rally Friday.

The

Dow Jones Industrial Average

closed down 14 points, or 0.1%, to 10,579.03; the

Nasdaq

dropped 3.44 points, or 0.2%, to 2060.57, after a 2.2% surge on Friday; and the

S&P 500

was down 3 points, or 0.3%, at 1139.81

Despite the losses, advancers beat out decliners by a five to four margin on both the

New York Stock Exchange

and the Nasdaq. Volume was 1.29 billion trades on the NYSE while 1.72 billion trades changed hands on the Nasdaq. Trading volume was slowed by a technical glitch at the American Stock Exchange in the morning.

"People are digesting the employment figures from Friday and finding that they're really not that good," said Jim Melcher, president and market strategist at Balestra Capital. "They got carried away on Friday initially ... That was pretty dumb. The question is if there will be job growth and the answer is that a lot more than

112,000 nonfarm payrolls is needed

each month."

He added: "There appears to be a good recovery but these figures can be misleading. If employment does not pick up, this is not a good recovery." Wall Street, Melcher thinks, is in denial and does not want to hear about poor jobs data. For example, the jobs being added are paying people less than they made at previous jobs, he said.

Melcher expects trading to pick up as more economic news gets released on Wednesday, Thursday and Friday, however. Also, "everyone is waiting for OPEC" later this week, he said. There are no major economic releases tomorrow.

Another cause for worry in Monday trading was the ambiguous remarks in a Saturday statement from the finance ministers at the G-7 meeting in Florida. They said that "excess volatility and disorderly movements in exchange rates are undesirable for economic growth." The remarks were aimed at currency markets that have seen the dollar repeatedly hitting all-time lows against its European counterpart for months.

"They tried to come out and slow the decline of the dollar, but it wasn't a message that came out and said where people are hoping for levels of support will be," said Robert Pavlik, portfolio manager at Oak Tree Asset Management.

The 10-year Treasury note was up 5/32, yielding 4.06% while the dollar had erased early losses vs. the euro and the Japanese yen. The euro was recently worth $1.2689 and the dollar was lately fetching 105.62 yen.

Meanwhile, companies continue to be acquisitive.

Juniper Networks

(JNPR) - Get Report

said Monday that it would acquire

Netscreen Technologies

(NSCN)

in a $4 billion stock-swap deal.

Juniper plans to swap 1.4 of its shares for each share of Netscreen. Juniper is paying a premium of about 58% to acquire the company, based on Friday's closing price. Shares of Juniper closed down $3.29, or 11.2%, at $26.18, while shares of Netscreen finished up $9.54, or 36%, at $35.94.

And

Blue Rhino

(RINO)

said it agreed to be acquired by Ferrell Cos.'

Ferrellgas

(FGP) - Get Report

for $17 a share in cash, or $340 million. Shares of Blue Rhino ended up $2.84, or 20%, at $16.74, while shares of Ferrellgas were up 41 cents, or 1.7%, at $24.79.

InterActive Corp.

(IACI)

said Monday that it earned 29 cents a share, excluding items, in its latest quarter, easily beating the Wall Street consensus of 23 cents a share. Shares of the company rose $1.09, or 3.4%, at $33.04.

Hasbro

(HAS) - Get Report

said it earned 61 cents a share in the fourth quarter, excluding certain items, on a 12.7% increase in total sales. Analysts had been calling for 55 cents a share. The company's stock was down 7 cents, or 0.3%, at $20.76 at the close.

Cypress Semiconductor

(CY) - Get Report

guided its first-quarter pro forma earnings to 18 cents a share, a penny above analysts' forecasts. Nevertheless, shares ended down 4 cents, or 0.2%, at $21.46.

In research,

Wyeth

( WYE) was upgraded by Merrill Lynch to buy from neutral, and Lehman Brothers upgraded

T. Rowe Price

(TROW) - Get Report

to equal weight from underweight. Shares of Wyeth closed down 4 cents, or 0.1%, at $41.88, while shares of T. Rowe were up 27 cents, or 0.5%, at $51.67.

Markets overseas ended mostly higher, with London's FTSE 100 up 0.7% at 4434.4 and Germany's Xetra DAX up 1.3% at 4098.97. Hong Kong's Hang Seng was up 2% at 13,576.68 and Japan's Nikkei was down 0.6% at 10,402.61.

Major earnings reports Tuesday include

Viacom

(VIA) - Get Report

,

Orbitz

( ORBZ) and

Hughes Electronics

( HS)

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