By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks lost ground Monday, with a
drop in home sales adding to initial pressure as investors awaited
bigger data later in the week and a meeting of Federal Reserve
policy makers.
A round of deal making moved shares of retailer Saks Inc., drug
maker Perrigo Co. and advertising firm Omnicom Group Inc.
The S&P 500 Index (SPX) fell 5.24 points to 1,686.44, while
the Dow Jones Industrial Average (DJI) dropped 42.80 points to
15,516.03. The Nasdaq Composite (RIXF) gave up an early rise to
trade at 3,607.61, down 5.56 points.
Indexes saw added pressure after the National Association of
Realtors said pending home sales fell 0.4% in June, with rising
rates blamed for undercutting sales momentum.
Still, the Dow and S&P remain camped out just below record
highs, while the Nasdaq is near a 13-year high. Overall, market
action remains "very healthy and very constructive," though the
market's reaction to upcoming data will be very telling, said Adam
Sarhan, chief executive of Sarhan Capital, in a phone
interview.
The Federal Reserve meeting, which concludes Wednesday, is the
"wild card" for markets given widely-held expectations the
policy-setting Federal Open Market Committee won't make major
changes to its policy statement, Sarhan said.
Investors are closely watching the Fed for any further clues to
when it may begin tapering its purchases of government bonds.
Concerns over a slower pace of stimulus was tied to a pullback by
stocks last month, though equities soon recovered to see the
S&P and Dow head back to record territory.
Meanwhile, nonfarm payrolls and other jobs data for July are set
for release on Friday.
Shares of Dow component Boeing Co. (BA) trimmed an early loss
but remained down 0.6%. The U.S. Federal Aviation Administration
has proposed a $2.75 million civil penalty against the aerospace
company, saying it failed to correct a problem with fasteners on
its 777 airplanes for more than two years after its discovery in
2008.
United Technologies Corp. (UTX) and General Electric Co. (GE)
were also lower, dragging on the blue-chip index. Caterpillar Inc.
(CAT) shares gained 1.2% after the company said it would buy back
$1 billion in shares from Societe Generale.
It wasn't quite a "merger Monday," but some deal news was
jostling individual stocks. Shares of Saks Inc. (SKS) rose more
than 3% after the retailer agreed to be acquired by Hudson's Bay
Co. in a $2.4 billion, all-cash deal.
American depositary shares of Elan Corp.(ELN) rose 4.5% after
Perrigo (PRGO) said it would use a combination of cash and stock to
buy Elan for $16.50 a share, which is a 10.5% premium over Elan's
closing price Friday. Perrigo shares dropped 5.6%.
Shares of Hertz Global Holdings Inc. (HTZ) dropped 3%. The
car-rental firm reported a 31% rise in second-quarter profit,
earning 45 cents a share when excluding one-time items. A survey of
analysts found a consensus forecast for earnings of 45 cents. See:
Anadarko, Express Scripts in focus Monday.
Shares of Omnicon Group Inc. (OMC) jumped more than 3% after it
and Publicis Groupe SA said Sunday that they will merge in the
biggest advertising industry deal in history.
Simon Property Group Inc. (SPG) said Monday that second-quarter
earnings rose 58%. The nation's largest shopping-mall operator
logged higher funds from operations to beat analyst estimates and
boosted its full-year outlook. Shares rose 0.2%.
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