Stocks finished mostly higher Monday amid takeover activity, higher oil prices and rising bond yields. Global market strength helped set a bullish backdrop, says Standard & Poor's MarketScope.
The Dow Jones industrial average slipped 0.32 points, or less than 0.01%, to 11,076.02, weighed down by losses at General Motors (GM) and McDonald's (MCD). The broader Standard & Poor's 500 index edged higher 2.55 points, or 0.2%, to 1,284.13. The tech-heavy Nasdaq composite index added 4.99 points, or 0.22%, to 2,267.03.
Recent economic patterns seem likely to persist, some economists say. "We don't think we're at an inflection point yet, a change in the general direction," says David Malpass, chief global economist with Bear Stearns. "In many ways, 2006 trends are a continuation of the 2005 trends," including rising interest rates, solid growth and "grudging" stock gains.
A fresh batch of M&A activity started off the week. Credit card issuer Capital One Financial (COF) agreed to buy North Fork Bancorp (NFB), the sixth-biggest bank in the New York City area, in a deal valued at roughly $14.6 billion. Capital One shares fell, while North Fork surged.
In the newspaper industry, McClatchy (MNI) agreed to buy Knight Ridder (KRI) for $14.6 billion. Rival Gannett (GCI) posted a slight incrase in revenue for the period ended Feb. 26.
NYSE Group (NYX) climbed amid reports the newly public stock exchange might make a bid for the London Stock Exchange, which is also in talks with the Nasdaq Stock Market (NDAQ).
In Germany, drugmaker Merck KGaA made a $17.4 billion bid for rival Schering AG (SHR), which rejected the offer. The attempt supports an outlook for consolidation, says S&P MarketScope. Both drugmakers are independent of similarly named U.S. companies Merck (MRK) or Schering-Plough (SGP).
Also in pharmaceuticals, Watson Pharmaceuticals (WPI) agreed to acquire Andrx (ADRX) in a $1.9 billion deal.
Outside M&A activity, AstraZeneca (AZN) was higher after it said a study showed that two years' treatment with its Crestor cholesterol drug reversed plaque build-up in arteries. Abbot Laboratories (ABT) received regulatory clearance to market its FreeStyle Freedom blood glucose monitoring system for consumer use.
On the brokerage front, Apple (AAPL) got a boost from Citigroup (C), which upgraded the computer maker to buy. Chip maker Advanced Micro Devices (AMD) was downgraded by ThinkEquity from buy to sell and by Punk Ziegel from buy to accumulate.
Among other companies in the news, airplane maker Boeing (BA) was little changed after a report that it's poised for a turnaround.
The economic calendar was quiet after Friday's solid jobs report. On Tuesday, February retail sales are expected to drop 0.7%, says Action Economics, while January business inventories rise 0.3%. The fourth-quarter current account deficit is forecast to hit a record $218 billion.
In the energy markets Monday, April West Texas Intermediate crude oil futures closed up $1.81 at $61.77 a barrel, as geopolitical concerns lingered.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 44.9 points, or 0.76%, to 5,952.8. Germany's DAX index added 50.24 points, or 0.87%, to 5,855.16. In Paris, the CAC 40 index climbed 38.2 points, or 0.75%, to 5,107.47.
Asian markets finished higher. Japan's Nikkei 225 index rose 245.88 points, or 1.53%, to 16,361.51. In Hong Kong, the Hang Seng index added 97.02 points, or 0.63%, to 15,542.07. Korea's Kospi index gained 18.21 points, or 1.38%, to 1,338.28.
Treasuries weakened on follow-through selling after the solid February labor data released Friday, says S&P MarketScope. Prices for 10-year Treasury notes closed lower at 97-28/32 with a yield of 4.77%, while 30-year bonds fell to 95-26/32 for a yield of 4.76%, amid speculation of interest-rate hikes globally and mixed remarks from the San Francisco Fed chief.