Stocks Turn Mixed After Service-Sector Report
Stocks turned mixed as the market digested a reading on the U.S. service sector. Yahoo weighed on technology shares after Microsoft withdrew its takeover offer.
"I think we're due for a pullback," said Dodge Dorland, chief investment officer at Landor Capital Management. "We've had quite a good move to the upside. We're running into levels of resistance for all the three major averages. I think Yahoo gives us reason to pull back, but I don't think a pullback will be serious."
The Institute for Supply Management reported the U.S. services sector unexpectedly grew in April, snapping a three-month contraction streak. A gauge of prices rose, which may have spurred inflation concerns.
Deal news was all the buzz this morning and at the top of that list was Microsoft-Yahoo.
Yahoo plunged after Microsoft over the weekend withdrew its offer to buy Yahoo, citing the companies' differences over price. Microsoft had been willing to go to $33 a share but Yahoo wanted at least $4 more. Microsoft shares rose.
Yahoo CEO Jerry Yang "is certainly under a lot of pressure now," Roland
Hirschmueller, an equities trader at German brokerage Baader, told Reuters "His days are numbered, if he doesn't manage to come with an alternative strategy."
Microsoft could still make a comeback bid, the Wall Street Journal reports, citing the fact that Oracle and PepsiCo walked away from big takeover attempts only to return to the negotiating table later.
Google shares advanced amid relief that the Internet-search company won't have to contend with the online-advertising behemoth that would result from a Microsoft-Yahoo deal.
Countrywide shares tumbled after analysts said Bank of Americashould walk away from its offerto buy the nation's largest mortgage lender, citing the hefty writedowns Bank of America would have to take due to the deterioration in the mortgage market.
Sprint Nextel, shares rose following news that Deutsche Telekom , which owns T-Mobile,is considering a bid for the company. A deal would create the largest U.S. mobile carrier, combining No. 3 Sprint with No. 4 T-Mobile.
Boeing denied a weekend report that its 787 Dreamliner faces further delays.
There's just one economic report scheduled for Monday morning. The Institute for Supply Management releases its measure of non-manufacturing activity for April at 10 am New York time. Economists predict the services index edged down to 49.5 from 49.6 in March.
Marvel beat first-quarter earnings expectations and raised its full-year outlook following its weekend box-office smash "Iron Man," which took in $100.75 million.
MONDAY: Anadarko, Cleveland Cliffs earnings; Bernanke speaks on foreclosures
TUESDAY: Indiana, North Carolina primaries; Earnings from Fannie Mae, Cisco and Disney
WEDNESDAY: Mortgage applications; Productivity; Pending home sales; Crude inventories; Consumer credit; Earnings from News Corp., Transocean
THURSDAY: Retail same-store sales; Jobless claims; Wholesale trade; Cablevision earnings
FRIDAY: Trade report
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