U.S. stocks wobbled between small gains and losses at the open Monday after earnings from Lowe’s and General Motors encouraged investors but worries persisted over the stability of the euro zone.
The Dow Jones Industrial Average gained 33 points, or 0.3%, to 10653 in early trading. American Express rose 1.6% after joining with U.K. private equity company Permira to bid for the Royal Bank of Scotland’s Global Merchant Services unit, according to The Financial Times, which cited unnamed sources.
Materials components strengthened following higher profits from home retailer Lowe’s and automaker General Motors. DuPont gained 1.2%, while Caterpillar 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 sank 1.2%.
The Nasdaq Composite gained 0.7%, while the Standard & Poor’s 500-share 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.
Shortly after the open, however, stocks turned negative, with the DJIA off 29.40 points at 10590.76, the Nasdaq Composite off 1.54 points at 2345.41, and Standard & Poor’s 500-share index off 2.93 points at 1132.73.
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 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 shares lost 4.1%.
Man Group of the U.K. said it will buy New York-listed hedge-fund manager GLG Partners 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 said it will buy psychiatric facility operator Psychiatric Solutions 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 received regulatory approval for its deal to buy the AIA unit of American International Group 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 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.
By Kristina Peterson
Tags: Dow Jones Industrial, economic recovery, economy, financial, financial market, global recovery, investors, money, stocks, US Economy, wall street
