Updated from 11:10 a.m. EDT
After opening higher, U.S. stocks were tilting toward the sell side midday Monday as investors contemplated encouraging earnings from
Bank of America
, bearish forward-looking indicators from the Conference Board and a new merger in the pharmaceutical space.
Dow Jones Industrial Average
was losing 58 points at 11,438, and the
lost 4 points to 1257. The
shed 11 points to 2272.
As for corporate news, Swiss pharmaceutical company
for the rest of
. Roche is already a 56% shareholder in the maker of cancer drug Avastin. Genentech shares jumped 13% on the news.
was another headliner, as the company
to give investor Carl Icahn, who wanted the Internet portal owner to work a deal with
, a seat on its board. Yahoo! stock was edging downward.
In the earnings department, Bank of America posted
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 8.4%.
"Listless would be a good word" to describe today's action, said Paul Nolte of Hinsdale Associates. After last week's rise for U.S. stocks, the market is in a digestion period that could carry over until tomorrow, he said.
Although financial firms are beating earnings expectations, their absolute results are not as encouraging, said Nolte. "We're looking for more evidence that the worst is over for the financials," he said.
As for the prospects of more merger deals aiding the market, Nolte pointed out that Roche's buying in Genentech and InBev's purchase of
both represent foreign firms buying U.S. companies, which is less encouraging for investors than if U.S. companies were joining together. He said recent acquisitions are a function of the dollar and the U.S.'s position in the economic cycle compared with overseas markets.
Providing a drag for the major indices,
, originally slated to report Monday morning, are
until after the market close to provide an update from a study on their joint venture drug, Vytorin. Merck lost 2.9%, and Schering-Plough tumbled 7.5%.
After the close, traders will also get results from
, as well as
Away from earnings, government-sponsored entity
, hamstrung by the credit crisis, may stop buying as many home loans and bonds backed by housing debt in an effort to raise capital.
Securities and Exchange Commission
regulations governing so-called naked short sales of financial-services firms including Freddie and sister firm
went into effect Monday. Shares of both companies were climbing.
XM Satellite Radio
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
. Shares of both XM and Sirius were on the rise.
In commodities, crude oil was gaining 56 cents to $129.44, and gold was up $5 at $963.
"I don't think that higher energy or lower energy is the main driver of the market," said Nolte. He said that
earnings beat was more important than a decline in energy prices for last week's rally in equities.
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 flat. The 10-year was even in price, yielding 4.08%, and the 30-year was level, yielding 4.65%. The dollar was slipping against the euro and the yen, but 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.