NEW YORK (AP) - Wall Street pulled back Monday as investors digested
Microsoft Corp.'s decision to withdraw its bid for Yahoo Inc. and a
better-than-expected reading on the service sector.
Microsoft had offered $43.7 billion to buy Yahoo Inc., but scrapped the bid
late Saturday after the software maker and the Internet provider could not agree
on a sale price.
The failed deal came as a disappointment to Wall Street, as
merger-and-acquisition activity tends to boost shareholder value, and also
signals to the broader market that corporate America is optimistic about the
future.
But investors did appear to take some encouragement from a key reading on
the U.S. service sector. The Institute for Supply Management said its April
index of nonmanufacturing activity rose to 52 from 49.6 in March. A reading
above 50 signals economic expansion; analysts had expected the figure would come
in at 49.3, according to economists surveyed by Thomson Financial/IFR.
In midmorning trading, the Dow Jones industrial average fell 64.97, or 0.50
percent, to 12,993.23.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell
3.73, or 0.26 percent, to 1,410.17, and the Nasdaq composite index fell 4.52, or
0.18 percent, to 2,472.47.
Helping to offset some of investors' disappointment over the abandoned Yahoo
deal was a report from The Wall Street Journal, which said Deutsche Telekom AG
is considering a bid to buy Sprint Nextel Corp., according to people familiar
with the discussions.
Bond prices slipped. The yield on the benchmark 10-year Treasury note, which
moves opposite its price, rose to 3.87 percent from 3.86 percent late Friday.
Overall, first-quarter earnings reports and economic data have been coming
in weak, but not as poor as many on Wall Street had braced for. Optimism for an
economic rebound later in the year has lifted the Dow back above the 13,000
mark.
Investors have lingering concerns, however -- not only is the housing market
still extremely weak, but commodities prices remain near record levels,
threatening consumers' discretionary spending and their ability to pay off debt.
Crude oil futures for June delivery rose $2.84 to $119.16 a barrel on the
New York Mercantile Exchange, boosted by news of an attack on a Nigerian oil
facility. Crude oil had spiked more than $3 a barrel on Friday, and some
analysts are concerned the commodity will surge back above its record near the
$120-a-barrel level.
Gold prices also climbed Monday, while the dollar traded mixed against other
major currencies.
Overseas, Japan's and Great Britain's markets were closed. In afternoon
trading, Germany's DAX index rose 0.13 percent, and France's CAC-40 rose 0.08
percent.
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