Late-session buying lifted the major indexes amid deal news and a drop in national manufacturing activity
Major stock indexes finished higher on the first trading day of the second quarter as late-session buying lifted the market out of an earlier mixed showing, says S&P. The highlights of the day were M&A news and a report showing a slowdown in manufacturing activity and higher prices-paid index.
The Dow Jones industrial average rose 27.95 points, or 0.23%, to 12,382.3. The broader Standard & Poor's 500 index gained 3.69 points, or 0.26%, to 1,424.55. The tech-heavy Nasdaq composite edged up 0.62 point, or 0.03%, to 2,422.26.
Looking ahead to Tuesday, the U.S. pending home sales will garner attention from the markets Tuesday given ongoing concerns over the housing sector, says Action Economics, which sees the home sales index rebounding to 109.0 after a 4.1% drop to 108.7 in January. Vehicle sales will also be released in the afternoon.
In economic news Monday, the March ISM index fell to 50.9 from February's 52.3 reading and the prices-paid index surged to 65.5 from 59.0, which added to inflation concerns. Economists had expected the index to rise to 53.0.
This week's main event is Friday's employment report -- the stock market will be closed on Good Friday.
In deal news Monday, Kohlberg Kravis Roberts & Co. agreed to acquire First Data Corp. (FDC) for $34 per share in cash, in a deal valued at about $29 billion.
Tribune (TRB) agreed to go private for $34 per share. Upon completion, the company will be privately held, with ESOP holding all of Tribune's stock and Sam Zell holding subordinated note and warrant entitling him to 40% stock.
Xerox (XRX) agreed to pay $1.5 billion, or $29 in cash per share, for Global Imaging Systems (GISX).
AirTran (AAI) raised its bid to acquire Midwest Air Group (MEH) to $15.00 per share, based on closing price of AAI stock on Mar 30. The offer consists of $9.00 in cash, 0.5842 of AAI share for each MEH, with total equity value of deal of $389 million.
In the troubled subprime area, New Century Financial Corp. filed for Chapter 11 bankruptcy protection, and said it would fire 3,200 workers immediately to better position the company for a possible sale, according to the Associated Press.
Investors should expect earnings warnings to trickle in with the start of the second quarter. M&T Bank (MTB) fell on news that the company expects first-quarter earnings to be hurt by charges related to lower Alt-A mortgage loan values, as well as fundamental net interest margin and expense headwinds. S&P cut estimates and maintained a hold opinion on the stock.
In other company news, Starwood Hotels & Resorts (HOT) rose after Steven Heyer resigned as CEO and director. The company chairman says issues with regard to his management style led it to lose confidence in his leadership. Starwood reaffirmed first-quarter and full year 2007 guidance.
In the energy markets, May NYMEX crude oil settled up 15 cents at $66.02 a barrel. The end of a strike at France's Fos-Lavera oil port weighed on prices earlier, though Iran tensions were a larger influence, says Action Economics.
European stock markets ended higher on Monday. In London, the FTSE-100 index rose 7.5 points, or 0.12%, to 6,315.6. Germany's DAX index gained 20.14 points, or 0.29%, to 6,937.17. In Paris, the CAC 40 index was up 11.4 points, or 0.2%, to 5,645.56.
Asian markets finished mixed after the Bank of Japan's Tankan survey of business confidence showed a worsening outlook among steelmakers, while India's central bank unexpectedly hiked interest rates. In Japan, the Nikkei 225 index tumbled 259.24 points, or 1.50%, to 17,028.41. In Hong Kong, the Hang Seng index edged up 8.77 points, or 0.04%, to 19,809.70. In China, the CSI 300 index rose 68.32 points, or 2.46%, to 2,850.11.
Treasuries traded sideways, as traders set up for some light volume selling ahead of payrolls Friday and the holiday weekend, says Action Economics. The 10-year note yield settled at 4.642%.
Some investors were disturbed by the trade duties Bush levied on China on Mar. 30, fearing it's the beginning of protectionism, while others see it as a pre-emptive strike as Congress is considering several protectionist measures, says S&P. But a $75 billion trade deal between the U.S. and South Korea announced Monday may help quell protectionist fears, says Action Economics.