By Barbara Kollmeyer
U.S. stocks bounced between small gains and losses on Monday as
earnings from Lowe's and General Motors encouraged investors, but
worries persisted over the stability of the euro zone.
The Dow Jones Industrial Average (DJI) gained 3 points, or 0.3%,
to 10,624 in early trading. American Express (AXP) rose 1.6% after
joining with U.K. private equity company Permira to bid for the
Royal Bank of Scotland's (RBS) Global Merchant Services unit,
according to The Financial Times, which cited unnamed sources.
Materials components strengthened following higher profits from
home retailer Lowe's (LOW) and automaker General Motors. DuPont
(DFT) gained 1.2%, while Caterpillar (CAT) climbed 1.%. Lowe's,
which is not a Dow component, fell 3.6% after it reported a 3%
profit rise but issued second-quarter guidance below Wall Street's
views. Rival Home Depot (HD) sank 1.2%.
The Nasdaq Composite (RIXF) gained 0.7%, while the Standard
& Poor's 500-share (SPX) index rose 0.4%, with all of its
sectors in the black. The material and industrial sectors led the
climb, while energy posted the smallest gains.
Concerns that the nearly $1 trillion bailout won't solve
Europe's sovereign debt woes continued to weigh on the euro, which
sank to a four-year low before inching back. The euro was recently
trading at $1.2387. The British pound also fell, dropping to its
lowest level against the dollar since March 2009, before rebounding
slightly. The Libor, the rate at which banks lend to each other
overnight, was fixed at its highest level since August.
Meanwhile the Shanghai Composite tumbled 5.1% as worries rose
that China could tighten monetary policy. But European stocks were
generally firmer.
The dollar slipped against the euro, but strengthened against
the yen. Treasurys declined, with the 10-year note down to push
yield up to 3.47%. Gold futures advanced.
General Motors, which is not publicly traded, reported its first
profit since 2007, buoying other automakers. Ford Motor (F) edged
up 0.5%, while American depositary shares of Toyota Motor rose
2.2%.
Astellas Pharma said it will buy OSI Pharmaceuticals for $4
billion in cash, a 55% premium to the last trading day before the
Japanese firm first tendered an offer for the U.S. biotech. OSI
(OSIP) shares lost 4.1%.
Man Group of the U.K. said it will buy New York-listed
hedge-fund manager GLG Partners (GLG) for $1.6 billion, or $4.50 a
share, which is a 55% premium to Friday's close. GLG shares jumped
49% in early trading.
Universal Health (UHS) said it will buy psychiatric facility
operator Psychiatric Solutions (PSYS) for $2 billion, or $33.75 a
share. Shares of UHS rose 9.6%, while Psychiatric Solutions slipped
0.5%.
And after a delay of over a week, Prudential PLC (PRU) received
regulatory approval for its deal to buy the AIA unit of American
International Group (AIG) for $35.5 billion. Prudential priced a
$21 billion sale of shares to existing investors. However, the deal
still needs to be approved by the U.K. insurer's shareholders.
Prudential slid 1.1%, while AIG edged down 0.1%.
Among other stocks in focus, BP (BP) climbed 1% after the oil
giant was able to successfully insert a tube into the broken pipe
leaking oil into the Gulf of Mexico. Crude-oil prices slipped below
$72 a barrel.
In U.S. economic data, the Federal Reserve Bank of New York's
Empire Manufacturing survey showed business conditions improved for
manufacturers in the area for the 10th consecutive month, but at a
slower pace than in April. The business conditions index moved to a
reading of 19.1 in May, lower than the reading of 30.7 expected by
economists.
Still to come, the National Association of Home Builders' May
index will be released at 1 p.m. EDT.