NEW YORK (AP) - Wall Street pulled back Monday as investors digested
Microsoft Corp.'s decision to withdraw its bid for Yahoo Inc. and oil prices
again approached $120 a barrel. The Dow Jones industrial average at times fell
more than 100 points.
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.
A jump in oil prices raised concerns about inflation that could force
consumers to cut back their spending on discretionary items. Crude oil futures
for June delivery rose $3.17 to $119.49 a barrel on the New York Mercantile
Exchange, boosted by news of an attack on a Nigerian oil facility. Oil had
spiked more than $3 a barrel on Friday, and many analysts believe the commodity
will surge back above its record near the $120-a-barrel level.
But investors did briefly 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 late morning trading, the Dow Jones industrial average fell 107.39, or
0.82 percent, to 12,950.81.
Broader stock indicators also declined. The Standard & Poor's 500 index fell
8.80, or 0.63 percent, to 1,405.01, and the Nasdaq composite index fell 12.59,
or 0.51 percent, to 2,464.40.
Bond prices rose as stocks declined. The yield on the benchmark 10-year
Treasury note, which moves opposite its price, fell to 3.85 percent from 3.86
percent late Friday.
Gold prices also climbed Monday, while the dollar traded mixed against other
major currencies.
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.
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.
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 fell 0.28
percent.
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