Stocks closed mixed on Monday as the latest batch of merger news failed to spark excitement in investors ahead of new economic data.
"The market has somewhat become like Pavlov's dog, waiting for some blockbuster merger deals to be announced," said Robert Pavlik, chief investment officer at Oaktree Asset Management. "Now people are questioning the wisdom behind some of these deals and the quality of companies private equity firms are buying."
The Dow Jones Industrial Average closed up 20 points, but the S&P 500 ended slightly lower, while falling tech stocks dragged down the Nasdaq Composite.
"Today was sort of a do-nothing day," Pavlik added. "I wouldn't be surprised if the market runs out of a little bit of steam here."
Five of the 10 economic sectors tracked by S&P were higher, led by modest gains in telecom stocks and energy. The influential financial and technology sectors led downside movers as broad weakness hit both groups.
"We're in a tug of war here," said Al Goldman, chief market strategist at A.G. Edwards. "The good news is that the market has been able to rally substantially in the last eight weeks. That's also the bad news and we're cruising for bruising."
Breadth was firmly negative with declining stocks outpacing gainers by almost two-to-one on the NYSE.
Following a surprisingly strong earnings season, investors are turning their focus back to economic reports, market pros said.
The Labor Department will release its monthly consumer price index on Tuesday morning. The CPI index is predicted to rise 0.5% in April, moderating slightly from a 0.6% increase in March, according to a consensus of economists.
"We have some traders that may be wary of tomorrow's CPI," said Frederic Dickson, chief market strategist at DA Davidson. "We may also see some troubling data in the retail area, and Wall Street is bracing itself."
DaimlerChrysler agreed to sell the majority of Chrysler to private equity group Cerberus Capital Management, sending shares of the German automaker higher. The company agreed to sell 80% of its money-losing U.S. automotive group to Cerberus for $7.4 billion.
The Dow got an early lift from General Motors, which gained following an analyst upgrade. Bear Stearns said the sale of Chrysler was favorable for both GM and Ford Motor .
Ford also gained following reports the Ford family was considering selling a part of their controlling stake in the automaker but an attorney for the Ford family later denied the reports.
Germany's Merck KGaA announced Sunday that it is selling its generic drug business to Mylan Laboratories for $6.6 billion.
Shares of Dow Jones gained after Rupert Murdoch offered the family that controls the newspaper publisher a board seat at News Corp., should the Bancroft family accept the company's $5 billion takeover offer, the Wall Street Journal reported.
Analyst comments hit shares of Monster Worldwide, which declined 3% after a Wachovia Securities analyst said he didn't believe a takeover was in the cards for the online job services provider.
Computer giant Dell fell 2% after S&P Equity Research downgraded the stock to "hold" from "buy," citing valuation concerns.
New York light sweet crude futures held steady at $62 a barrel amid worries over the disruption of oil supplies from Nigeria. There was also concern about whether U.S. gasoline inventories can meet summer driving demand. AAA said the average price of gasoline has risen to a record high of $3.07 a gallon.
Europe Ends With Modest Losses, Asia Rises
DaimlerChrysler's rise gave an early lift to German stocks but the DAX ended lower in Frankfurt. Britain's FTSE-100 and France's CAC-40 also closed lower.
The French tech sector stumbled after IT services firm Atos Origin plunged 12% after it called off talks with potential takeover suitors.
In the banking sector, the consortium of Royal Bank of Scotland, Santander and Fortis confirmed they bid $24.5 billion for ABN Amro'sU.S. unit LaSalle, in pursuit of a complete takeover of ABN, but that offer was rejected. The consortium plans to make another announcement by May 27.
Tokyo's Nikkei 225 Average closed stronger as Eisai jumped after a U.S. court upheld a patent protecting the company's key drug, and Tokyo Electron climbed thanks to strong earnings. Exporters such as Toyota Motor regained ground following an advance in stocks in the United States, one of the biggest markets for Japanese goods. But shares of shipbuilder Ishikawajima-Harima Heavy Industries and Isuzu Motors slid after downbeat earnings reports, limiting gains in the market.
South Korea's Kospi Index rose to a record, led by financials such as Kookmin Bank after the finance minister offered assurances that domestic demand was recovering and pledged to revitalize the asset management industry.
The Shanghai Composite Index climbed to just below its record high as investors shrugged off an announcement by the securities regulator that it would crack down on insider trading and share manipulation.