Stocks ended mixed as the S&P 500 failed to hold above its previous record, despite another busy day of mergers and acquisitions activity.
"Everyone knew that the S&P was going to reach its old record but clearly there is resistance there," said Stephen Porpora, managing floor broker at William O'Neil. "We haven't got a correction because everybody has been looking for one. Everyone has been saying that the markets have been overbought for the last five weeks."
The S&P 500 ended slightly higher and is now just 2 points from a record closing high of 1527.46 set in March 2000. The Dow Jones Industrial fell 13 points on a late selloff in large-cap stocks, while the Nasdaq Composite led the major indexes with a 0.8% gain.
Alltel, the fifth-largest wireless services provider in the United States, said late Sunday it will be acquired by TPG Capital and Goldman Sachs unit GS Capital for almost $28 billion. Alltel shares rose just 6.8%, however, as the takeout price was just a 10% premium to Alltel's closing price Friday.
Dow component General Electric announced that it has signed a definitive agreement to sell its plastics business to Saudi Basic Industries in a deal valued at $11.6 billion in cash plus assumption of liabilities. General Electric, CNBC's parent company, expects the deal to close in the third quarter.
"With one merger after another, it's Wall Street's version of 'Let's Make A Deal' and that's driving everything higher," said Rick Pendergraft, chief investment analyst for Investor's Daily Edge, an investment newsletter.
Seven of the ten economic sectors tracked by S&P closed higher with gains led by energy stocks, which rose more than 0.8% as oil prices continue to rally. The tech sector was the second-best performer, with broad strength from software, semiconductors, networking and computer hardware shares. Consumer staples stocks such as Costo Wholesale led downside movers on Monday.
Breadth was positive with gainers outpacing decliners by a three-to-two margin on the NYSE.
Wyeth and Elan shares jumped after the companies said they plan on taking their experimental Alzheimer's drug into late-stage clinical trials.
GlaxoSmithKline shares fell sharply after a study published in the New England Journal of Medicine said its diabetes drug Avandia increased the risk of heart attacks by 43%. The stock lost more than $13 billion in market value.
In other merger news, medical testing equipment maker Hologic agreed to acquire competitor Cytyc for $6.2 billion in cash and stock.
China agreed to acquire a $3 billion stake in U.S. private equity firm Blackstone Group in a deal that marks that country's long-anticipated move to expand how it invests its massive foreign exchange reserve.
In the energy market, New York light sweet crude futures surged 2% to close above $66 a barrel as continued unrest in Nigeria threatens the OPEC nation's oil exports.
Lowe's Companies the second-largest U.S. home improvement chain, said first-quarter profit fell 12.1% due to a slowing home improvement market amid a continued slump in the housing sector.
European Shares End Mixed, Asia Shrugs Off Beijing's Rate Hike
Stocks closed mixed in Europe amid lighter trading volume. In Asia, markets reacted calmly to China's surprise interest rate hike last Friday, while Australia closed at a new all-time high.
Germany's DAX was higher, while the Paris CAC-40 and the London FTSE-100 were modestly lower.
The Italian banking sector was in the spotlight as UniCreditagreed to buy rival Capitalia Sunday, for over $29 billion in stock. The newly-formed company will create the second-largest banking group in Europe.
Societe Generale was the biggest gainer on the CAC-40, following the news, as the UniCredit and Capitalia combination could consolidate further with the French financial giant.
Also in corporate news, German manufacturing giant Siemens tapped Peter Loescher as its new CEO. Loescher has been an executive at U.S. drugmaker Merck for the past year and has the advantage of not being linked to Siemens recent bribery scandal.
Tokyo's Nikkei 225 Average finished higher as technology exporters such as Sony and TDK advanced while the yen slipped to a record low against the euro.
South Korea's Kospi Index rose to their latest record as automakers such as Hyundai Motor surged on analyst upgrades.
China's surging stock market shrugged off the central bank's most aggressive monetary tightening this year, testing a record high on Monday as newly created mutual funds poured into shares.
In Australia, the S&P/ASX 200 Index rose to hit a new record closing high with sentiment lifted by the muted impact of China's policy tightening on global equity markets, while stronger base metal prices lifted mining stocks.