Merrill Lynch and Citigroup each announced $1 billion-plus deals, while Intel buoyed the Dow and Nasdaq. Investors awaited Wednesday's Fed statement
Major stock indexes finished narrowly mixed Monday, as investors sifted through M&A news and earnings reports ahead of this week's Federal Reserve policy meeting. With central bankers expected to keep interest rates unchanged, traders want to see what the Fed's statement will say about future policy, particularly amid speculation of possible rate hikes, says Standard & Poor's Equity Research.
On Monday, the Dow Jones industrial average nudged higher 3.76 points, or 0.03%, to 12,490.78. The broader Standard & Poor's 500 index slipped 1.56 points, or 0.11%, to 1,420.62. The tech-heavy Nasdaq composite rose 5.6 points, or 0.23%, to 2,441.09.
NYSE breadth was positive, with 18 issues advancing for every 15 declining. Nasdaq breadth was 18-13 positive.
The Fed could point to recent stronger economic data in its Wednesday policy statement, some economists say. "It is possible the Fed will acknowledge the improved outlook for growth by removing the wording that 'economic growth has slowed' and simply stating that 'although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters,'" says John Ryding, chief U.S. economist at Bear Stearns, in a note to clients.
Intel (INTC) and IBM (IBM) helped lift the Dow on Monday. Both stocks were higher after the companies each separately announced a transistor breakthrough that could lead to smaller, more energy-efficient chips.
Deal activity was also in focus. Merrill Lynch (MER) agreed to buy First Republic Bank (FRC) for $1.8 billion in cash and stock.
Citigroup (C) said it will buy British insurer Prudential's Egg Banking for $1.13 billion in cash.
US Airways (LCC) reportedly may raise its hostile takeover bid for Delta Airlines (DALRQ.PK) by $1 billion.
Meanwhile, drugmakers Bristol-Myers Squibb (BMY) and Sanofi-Aventis (SNY) were reportedly nearing a friendly merger deal.
Canada-based paper and forest products company Abitibi-Consolidated (ABY) and U.S. peer Bowater (BOW) agreed to merge in an all-stock deal.
Biosolid recycling services provider Synagro Technologies (SYGR) said it will be acquired by the Carlyle Group in a deal valued at $772 million, including debt assumption, or $5.76 per share in cash.
Norton security software maker Symantec (SYMC) agreed to acquire software maker Altiris (ATRS) for $830 million in cash, or about $33 per share.
In earnings news, Verizon (VZ) was modestly higher after the telecommunications company reported a drop in fourth-quarter profits but topped analyst estimates.
Tyson Foods (TSN) was higher as the meat producer posted a 46% increase in fiscal first-quarter earnings.
Toymaker Mattel (MAT) edged up on stronger-than-expected fourth-quarter results, helped by improved margins and better sales of its Barbie and Fisher-Price products.
Copper producer Phelps Dodge (PD) was lower despite a sharp gain in fourth-quarter earnings.
A 75% jump in fourth-quarter net income, in line with expectations, wasn't enough to keep shares of drugmaker Schering-Plough (SGP) from falling.
Looking ahead, companies set to announce quarterly results Tuesday include 3M (MMM), Pepsi Bottling Group (PBG), Procter & Gamble (PG), and Wyeth (WYE).
On the analyst front, Kroger (KR) was higher after Bank of America upgraded the supermarket operator from sell to buy, citing less impact than expected from Wal-Mart (WMT).
In economic news, the U.S. calendar was light Monday. The Fed opens its policy meeting Tuesday and is slated to release its policy statement Wednesday.
Also on Tuesday's docket, the release of January consumer confidence is seen rising to 110.0 from December's unexpectedly strong 109.0, says Action Economics.
In the energy markets Monday, March West Texas Intermediate crude oil futures fell $1.41 to $54.01 a barrel amid speculation of ample supplies and a report Saudi Arabia may intend to keep prices around $50 a barrel.
European markets finished higher. The FTSE-100 index in London rose 11.9 points, or 0.19%, to 6,239.9. Germany's DAX index added 35.67 points, or 0.53%, to 6,726.01. In Paris, the CAC 40 index was up 37.4 points, or 0.67%, to 5,619.7.
Asian markets ended mixed. In Japan, the Nikkei 225 index gained 48.53 points, or 0.28%, to 17,470.46. In Hong Kong, the Hang Seng index lost 44.45 points, or 0.22%, to 20,236.68. Korea's Kospi index shed 8.23 points, or 0.6%, to 1,363.1.
Treasury yields drifted higher amid speculation the Fed's policy statement Wednesday will be more hawkish. The 10-year note fell in price to 97-30/32 for a yield of 4.89%, while the 30-year bond dropped to 92-17/32 for a yield of 4.99%.