Stocks lost ground in the final hour of trading Monday to finish with modest losses. Though a few major merger deals sparked buying in some sectors, major indexes were unable to mount any sustained advance. Also, geopolitical developments -- especially Iran's seizure of three British military vessels -- may have kept a lid on the market.
The Dow Jones industrial average fell 44.94 points, or 0.43%, to 10,371.47. The broader Standard & Poor's 500 index was down 4.7 points, or 0.41%, to 1,130.32. The tech-heavy Nasdaq composite index lost 12.35 points, or 0.62%, to 1,974.38.
Until the last hour of trading, the major indexes had drifted in a tight range on light volume, with 1.12 billion shares changing hands on the New York Stock Exchange, and 1.36 billion shares traded on the Nasdaq. But late in the session, "intraday bulls ran out of patience and thin volume allowed for [a] bigger impact to [the] downside," says Standard & Poor's MarketScope.
Managed health care stocks were the biggest decliners, hurt by a Wall Street Journal report that Blue Cross and Blue Shield were limiting a rise in premiums, prompting worry of pricing pressure.
Monday's biggest merger deal came from the banking sector. Wachovia (WB) agreed to acquire SouthTrust (SOTR) in a stock deal valued at about $14.3 billion, or $41.83 per share.
Simon Property Group (SPG) agreed to acquire fellow real estate investment trust Chelsea Property Group (CPG) for cash and stock valued at about $3.5 billion.
Among the smaller deals, Oxford Industries (OXM) agreed to acquire Ben Sherman Ltd., a designer, distributor, and maker of branded sportswear, for about $146 million, plus expenses.
In the tech sector, Nortel Networks (NT) showed more upside, following an 8% jump Friday, on reports of talks aimed at partnership with Cisco Systems (CSCO).
Taser International (TASR) shares jumped 18% after the company raised 2004 revenue guidance.
Goodyear Tire & Rubber (GT) gained ground after it narrowed its loss and reported record sales for the first quarter.
Companies on Tuesday's earnings calendar include Goldman Sachs (GS), Morgan Stanley (MWD), Kroger (KR), Darden Restaurants (DRI), and 3Com (COMS).
There were no economic reports today. The economic calendar is busier at the end of this week, starting with a read of durable goods orders for May on Thursday. Traders will also get their weekly dose of initial jobless claims, plus a read on new home sales for May. Friday delivers the final gross domestic product figures, as well as Michigan's consumer sentiment survey results for June and existing home sales.
Treasury yields fell on a flight to quality trade on reports of Iran's seizure of three British military craft, reports Action Economics. Terror and technical factors were about all the market had to go on, but at least the $25 billion 2-year note auction announcement gave dealers something to set up for on Wednesday, says Action Economics.
European stock markets finished with small losses Monday. London's FTSE 100 index was down 3.6 points, or 0.08%, to 4,502.2. A lack of major economic or earnings news provided little impetus to move prices, says Standard & Poor's MarketScope.
Germany's DAX index lost 10.48 points, or 0.26%, to 3,989.31. Traders said concerns about an escalation of the situation in the Middle East, following reports that Iran has detained three British vessels and arrested more than five crew members, weighed on the market.
In Paris, the CAC 40 index fell 0.62 point, or 0.02%, to 3,740.28. The index was held back by energy, telecom and financial stocks: Total (-0.06%), France Telecom (+0.39%), and BNP-P (-0.29%).
Asian markets finished mixed on Monday. In Japan, the Nikkei index rose 218.08 points, or 1.92%, to 11,600.16 on broad-based buying, boosted by a rebound on Wall Street on Friday. Techs, insurers, retail names, and contractors rose.
In Hong Kong, the Hang Seng index lost 9.96 points, or 0.08%, to 11,845.59, with properties leading losses on news that there will be more new flats available in the market in the next few years than previously expected.