Crude futures slid below $58. Sanofi-Aventis reportedly scuttled its takeover talks for Bristol-Myers Squibb, while Vodafone paid $11.1 billion for a foothold in India
Stocks finished modestly lower Monday, as a drop in oil prices hampered energy shares and traders digested some M&A news including a pair of failed takeovers. Uncertainty ahead of Federal Reserve Chairman Ben Bernanke's upcoming testimony to Congress weighed on sentiment, says Standard & Poor's Equity Research.
On Monday, the Dow Jones industrial average fell 28.28 points, or 0.22%, to 12,552.55. The broader Standard & Poor's 500 index dropped 4.69 points, or 0.33%, to 1,433.37. The tech-heavy Nasdaq composite was down 9.44 points, or 0.38%, to 2,450.38.
NYSE breadth was negative, with 17 issues declining for every 13 advancing. Nasdaq breadth was 19-12 negative.
The economic calendar was light Monday. On Wednesday and Thursday, Bernanke delivers his semiannual report to Congress on the economic outlook. The week's docket also holds December trade data Tuesday, January retail sales Wednesday, and industrial production, capacity utilization, and the Philadelphia Fed index on Thursday.
Bernanke's testimony will likely reiterate recent statements suggesting no interest-rate cuts in the near future, some analysts say. "Bottom line is that periods in the past when the Fed failed to cut rates in response to slowing earnings growth tended to see sideways moving stock markets with defensives outperforming cyclicals and first-quartile performance underpinned by dividend-yields," says David Rosenberg, chief North American economist at Merrill Lynch, in a note to clients.
Oil prices tumbled, weighing on corresponding shares. In the energy markets, March West Texas Intermediate crude oil futures fell $2.08 to $57.81 a barrel, following a report Saudi Arabian Oil Minister Ali Naimi said the world oil market is in "much, much better health and balance."
Among Monday's stocks in the news, Bristol-Myers Squibb (BMY) was lower on a report it has ended talks to be taken over by Sanofi-Aventis (SNY) of France.
Nasdaq (NDAQ) was lower after London Stock Exchange shareholders over the weekend overwhelmingly decided not to accept the Nasdaq's $5.3 billion hostile takeover bid.
In other M&A Vodafone (VOD) was higher after the mobile telephone company agreed to pay $11.1 billion for the 67% stake in Hutchison Essar India held by Hutchison Telecom International.
India's Hindalco agreed to acquire Novelis (NVL) in a $5.9 billion deal that would create the world's largest aluminum rolling company.
Four Seasons Hotels (FS) agreed to be acquired by affilliates of Cascade Investment in a deal worth about $3.8 billion, including debt assumption, or $82 per share in cash.
Home Depot (HD) was higher on news the home-improvement retailer hired Lehman Brothers to explore "strategic alternatives" for its HD Supply wholesale unit.
Google (GOOG) was down following a report major media companies are accusing the Internet search giant of benefiting from pirated movies. Meanwhile, Google's YouTube unit signed a deal with Digital Music Group (DMGI) to post more than 4,000 hours of video content, including classic TV shows.
Outside of deal news, Onyx Pharmaceuticals (ONXX) was sharply higher after the drugmaker and Bayer (BA) announced a trial showed their Nexavar liver-cancer drug substantially prolongs life for patients in advanced stages of the disease.
Shares of Loews (LTR) rose after the conglomerate reported a nearly six-fold jump in fourth-quarter earnings.
Elsewhere, Wal-Mart (WMT) said it was considering a move into Russia.
In analyst calls, Boston Scientific (BSX) was lower after First Boston downgraded the stock from outperform to peer perform.
Southwest Airlines (LUV) was higher after Bear Stearns raised its rating on the stock from peer perform to outperform.
European markets finished lower. The FTSE-100 index in London fell 29.3 points, or 0.46%, to 6,353.5. Germany's DAX index shed 51.66 points, or 0.75%, to 6,859.45. In Paris, the CAC 40 index was down 48.5 points, or 0.85%, to 5,643.95.
Asian markets ended lower. In Hong Kong, the Hang Seng index lost 84.25 points, or 0.41%, to 20,593.41. Korea's Kospi index slid 13.39 points, or 0.94%, to 1,414.20. In Japan, markets were closed for a holiday after the Nikkei 225 index on Friday gained 211.85 points, or 1.23%, to 17,504.33.
Treasury yields extended Friday's gains ahead of Bernanke's testimony later in the week. The 10-year note slipped in price to 98-20/32 for a yield of 4.8%, while the 30-year bond fell to 97-30/32 for a yield of 4.88%. Supply was heavy and traders see little chance the Fed will cut rates anytime soon, says Action Economics.