Merger News Passes, Stocks Finish Lower
Updated from 2:44 p.m. EDT
Stocks in New York were modestly lower Monday, unable to catch a break even with news on a trio of mega mergers.
The
Dow Jones Industrial Average
fell 78.69 points, or 1.2%, to 6548.25, and the
S&P 500
slunk back 6.7 points, or 1%, to 676.7. The
Nasdaq
was lower by 24.96 points, or 1.9%, at 1268.89.
Industrials and financials were outperforming, though, with
Bank of America
(BAC) - Get Report
leading the Dow with an 18% increase, and the KBW Banking Index rising 6%.
Merck
(MRK) - Get Report
was the weakest Dow component, losing 11%, after proposing a $41 billion cash-and-stock deal, offering
Schering Plough
(SGP)
shareholders 0.5767 of a Merck share and $10.50 in cash for each of their shares. Schering's have surged 16% higher.
Also, the
Wall Street Journal
reported that the board of
Genentech
(DNA)
is near a deal to sell the biotech staple to Swiss pharma company Roche for $95 per share, citing people familiar with the matter.
And in yet another a merger update,
Dow Chemical
(DOW) - Get Report
and
Rohm & Haas
(ROH)
have reportedly
reached a settlement
for the $15 billion merger between the two firms, agreeing to close a deal no later than April 1, according to
CNBC
.
Meanwhile, Washington continues to fixate investors, says Paul Nolte, Director of Investments at Hinsdale Associates. "The daily news briefing, the comments about the horrendous economy, floating the possibility of a new stimulus package (just after the second was signed) and little resolution to the banking crisis have kept investors from stepping into stocks with any confidence. In fact, many are stepping away and vowing to never return," he writes.
Stocks abroad lost ground after the U.K government said it was taking a greater, controlling stake in
Lloyds Banking Group
(LYG) - Get Report
. In addition, the World Bank warned over the weekend that the world is falling into the first global recession since World War II.
Stateside,
Capital One
(COF) - Get Report
became the latest bank to
. The company said that scaling back to 5 cents a share from 37.5 cents will preserve more than $500 million in capital annually.
Wells Fargo
(WFC) - Get Report
cut
its
dividend on Friday, following banks like
PNC
(PNC) - Get Report
,
JP Morgan Chase
(JPM) - Get Report
and Bank of America.
In other banking news,
Credit Suisse
(CS) - Get Report
, Vice Chairman Hans-Ulrich Doerig, in light of Walter Kielholz moving to become the Chairman of
Swiss Re
.
Meanwhile, the
Financial Times
and
CNBC
reported that Bank of America is starting to withdraw offers to some MBA students that graduate from U.S. business schools this year, as one of the provisions of the TARP bailout money prevents the bank from applying for H1-B visas for immigrants if they have recently laid off U.S. workers.
Job cuts continue, as U.S. publisher
McClatchy
(MNI) - Get Report
, which owns 30 daily newspapers, said it will slash 1,600 jobs, or about 15% of its workforce, as advertising sales struggle.
Not everyone is struggling under the tough economy, though.
McDonald's
(MCD) - Get Report
posted a 1.4% rise in February sales at restaurants open at least 13 months, with help from strength in the U.S. Last week,
Wal-Mart
(WMT) - Get Report
also had sales growth to report, and went against the grain by raising its dividend.
A few stem-cell stocks also got a boost Monday as President Obama signed an executive order that would reverse restrictions on stem cell research. Geron and
StemCells
(STEM)
surged 21% and 52%, respectively.
In
, Piper Jaffray upgraded
Amazon
(AMZN) - Get Report
to buy and raised its price target to $81 from $55. Also, Collins Stewart named
Microsoft
(MSFT) - Get Report
named a top pick.
In commodities, oil rose $1.55 to settle at $47.07 a barrel, and gold lost $24.70 to $918 an ounce.
Longer-dated Treasuries were falling. The 10-year note was losing 7/32 to yield 2.9%, and the 30-year was giving up 18/32, yielding 3.6%. The dollar was recently stronger against the yen, pound and euro.
Stocks overseas were mixed. The FTSE in London and the DAX in Frankfurt were slightly higher. But in Asia, Hong Kong's Hang Seng and Japan's Nikkei closed lower by 1.2% and 4.8%, respectively.
