Breaking News Bar
updated: 4/28/2014 4:54 PM

Stocks higher on deal hopes; BofA sinks

hello
Success - Article sent! close
  • Sabre Corp. President & CEO Tom Klein delivers his remarks after Sabre's IPO began trading at the Nasdaq MarketSite, in New York, Thursday. Stocks rose Thursday, with the Standard & Poor's 500 Index erasing an earlier slide, as Internet and smaller companies pulled back from a selloff amid optimism over merger activity.

      Sabre Corp. President & CEO Tom Klein delivers his remarks after Sabre's IPO began trading at the Nasdaq MarketSite, in New York, Thursday. Stocks rose Thursday, with the Standard & Poor's 500 Index erasing an earlier slide, as Internet and smaller companies pulled back from a selloff amid optimism over merger activity.
    ASSOCIATED PRESS

 
Associated Press

NEW YORK -- It was a choppy ride for the stock market on Monday that ended with major U.S. indexes closing mostly higher.

Traders were pulled in multiple directions. Stocks opened higher, fell in the afternoon, and then rose again in the last hour of trading.

Order Reprint Print Article
 
Interested in reusing this article?
Custom reprints are a powerful and strategic way to share your article with customers, employees and prospects.
The YGS Group provides digital and printed reprint services for Daily Herald. Complete the form to the right and a reprint consultant will contact you to discuss how you can reuse this article.
Need more information about reprints? Visit our Reprints Section for more details.

Contact information ( * required )

Success - request sent close

Bank stocks fell after Bank of America said a financial error would force it to cancel its stock buyback plan and dividend increase, while health-care stocks rose after U.S. drug giant Pfizer renewed its pursuit of a merger with British rival AstraZeneca. Formerly highflying technology stocks fell again, dragging the Nasdaq composite index into the red.

The Standard & Poor's 500 index rose 6.03 points, or 0.3 percent, to close at 1,869.43. The Dow Jones industrial average rose 87.28 points, or 0.5 percent, to 16,448.74 and the Nasdaq edged down 1.16 points, or 0.03 percent, to 4,074.40. The Nasdaq erased most of a 61-point loss.

Bank of America sank $1.00, or 6.3 percent, to $14.95 after it unexpectedly announced it would suspend its stock buyback program and dividend increase. The bank discovered an error in how it calculates its capital ratio, a crucial measure of a bank's financial strength. The Federal Reserve asked the bank to put its buyback and dividend increase on hold until the error was fixed.

Goldman Sachs and Citigroup each 1 percent following BofA's announcement. JPMorgan Chase edged down 0.4 percent.

High-risk technology stocks were another area of weakness Monday as investors continue to cut their exposure to high-growth names and turn their focus to larger dividend-paying companies. Amazon fell $7.25, or 2.5 percent, to $296.58 after falling 10 percent on Friday. Netflix lost $7.87, or 2.4 percent, to $314.21 and Facebook fell $1.57, or 2.7 percent, to $56.14.

In contrast, "old" technology companies such as Microsoft, Apple and IBM, which have more mature businesses and pay quarterly dividends, rose 2 percent or more Monday.

High-growth technology and biotechnology stocks have been falling for several weeks now. The Nasdaq is down 3 percent in April, while the S&P 500 and Dow are roughly flat.

Traders say the selling has been coming from large investors, who have been moving out of high-growth stocks and into safer investments. The Russell 2000, an index made up mostly of smaller companies, is down nearly 5 percent this month.

"When you have so many investors doing the same thing at the same time, you get these exaggerated moves in some of these stocks," said Ian Winer, director of equity trading at Wedbush Securities.

Health-care stocks did well after drug giant Pfizer renewed its push to buy British drug company AstraZeneca for $100 billion. The deal would be the latest big merger in the drug industry in recent weeks, if it happens. AstraZeneca jumped $8.35, or 12 percent, to $77.01. Pfizer rose $1.29, or 4.2 percent, to $32.04.

The health-care industry has seen several big deals this year. Just in the last two weeks, Zimmer Holdings announced it would buy medical device maker Biomet for $13.4 billion, Valeant Pharmaceuticals said it would bid for Botox maker Allergan for $50 billion and Novartis agreed to buy GlaxoSmithKline's cancer drug business for $16 billion.

"These deals have a halo effect on the rest of the market, particularly in the industry where it happens, because investors expect it means more deals are on their way," said Quincy Krosby, market strategist with Prudential Financial.

Investors now turn their focus to the Federal Reserve, which starts a two-day policy meeting on Tuesday. The central bank is expected to further dial back its economic stimulus by reducing its monthly bond purchases to $45 billion. Those monthly purchases, which totaled $85 billion in December, have helped hold down long-term interest rates for consumers and businesses.

In other markets, bond prices fell, pushing the yield of the 10-year U.S. Treasury note up to 2.70 percent from 2.66 percent Friday. Gold was little changed at $1,299 an ounce.

Share this page
Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.