Stocks Decline, Led by Financials; HP Rises
Investors shrugged off a positive government report on consumer spending and a raft of mergers and acquisitions news to trade stocks lower, although volume during this last week of August was light.
The Dow Jones Industrial Averageis down more than 60 points, with Intel , Home Depot, and Bank of America , leading the way. Hewlett-Packard was higher.
TheS&P 500 and Nasdaqwere also down. All key S&P sectors were lower, led by financials, consumer discretionary stocks and industrials.
The major indexes ended last week with a rally after the Federal Reserve signaled it would take measures to support the recovery, if necessary. Still, the Dow, S&P 500, and Nasdaq are on track to post a loss in August for the first time since 2005.
Still, not all market pros are pessimistic about the outlook for stocks, particularly given the boost in corporate profits evident in Friday's report on the nation's Gross Domestic Product.
"We think that the year is going to end far better than it is right now," David Katz, chief investment officer at Matrix Asset Management, said on CNBC Monday. Katz said stocks could return 15 percent or better in the last three months of the year.
Earlier Monday, the Commerce Department said consumer spending rose 0.4 percentafter being flat in June. The results were better than the 0.3 percent rise estimated by analysts polled by Reuters. Personal incomes rose 0.2 percent in July.
The big economic news for the week comes on Friday, when the government releases jobs data.
In corporate news, Hewlett Packard's shares are up more than 2 percent as the company's board announced plans to buy back $3 billion in stockin the fourth quarter.
The computer maker is also in the middle of bidding war with Dell for 3Par , a utility storage provider, and on Friday HP raised its bid to $2 billion or $30 a share. Dell's latest bid is $27 a share.
Elsewhere on the merger front, Genzyme shares rose after the pharmaceutical company's board unanimously rejected an $18.5 billion offer that translated into $69 per sharefrom Sanofi-Aventis.
Meanwhile, Intel shares are lower after news it will buy the wireless unit of German chipmakerInfineon for $1.4 billion in cash. The unit will be operated as a stand-alone business.
Also, 3M shares were down more than 1 percent after the company said it would buy biometric identification systems company Cogent in a deal valued at more than $900 million. Cogent shares soared on the news.
Elsewhere on the merger and acquisition front, BHP Billiton told analysts it would consider divesting several units of Potash if it is successful at acquiring the company.
Most airline stocks are rising following news that the Justice Department approved the merger between UAL's United Airlines and Continental Airlines , after the airlines agreed to provide takeoff and landing slots at New Jersey's Newark Liberty Airport to Southwest Airlines . Shareholders are expected to approve the merger in September.
The Justice Department, meanwhile, has some concerns with Comcast's bid to buy control of General Electric's NBC Universal division over how the merger may affect the Internet TV market, according to the Wall Street Journal. (GE is the parent company of CNBC.)
In other news, Walt Disney and Time Warner said they're making progress in a dispute that could result in Disney's ABC-TV and ESPN channels being blacked out on Time Warner cable systems, though the two sides now expect to reach a deal without such an occurrence.
Also in the entertainment arena, the battle to dominate distribution of movies and TV on the Internet is heating up as Google’s YouTube negotiates with major film studios in Hollywood to offer a pay-per-view service this year.
Bank stocks are weaker across-the-board Monday, extending a trend evident all month, and reflecting deep investor concerns with the sluggish U.S. economy. Among the worst performers for the day are Key Corp , US Bancorp , and Principal Financial .
On Tap This Week:
MONDAY: Fed's Bullard speaks; Warren Buffett's 80th birthday
TUESDAY: S&P/Case-Shiller home price index; consumer confidence index, FOMC minutes
WEDNESDAY: August auto sales; weekly mortgage applications; Challenger job-cut report; ADP employment report; ISM mfg index; construction spending; weekly oil inventories; Fed's Fisher speaks; Apple event
THURSDAY: August chain store sales; weekly jobless claims; productivity and costs; factory orders; pending home sales
FRIDAY: August jobs report; Fed's Lockhart speaks; ISM services index
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