Major stock indexes finished modestly lower Monday, as a burst of takeover news failed to lift stocks. Traders were restrained by worries about a market correction and speculation of weakness in upcoming economic reports, says Standard & Poor's Equity Research.
On Monday, the Dow Jones industrial average slipped 15.22 points, or 0.12%, to 12,632.26, with a Merck (MRK) upgrade capping losses. The broader Standard & Poor's 500 index fell 1.82 points, or 0.13%, to 1,449.37. The tech-heavy Nasdaq composite was down 10.58 points, or 0.42%, to 2,504.52.
NYSE breadth was flat. Nasdaq breadth was negative, with 18 issues declining for every 12 advancing.
In economic news, former Federal Reserve Chairman Alan Greenspan said it's "possible" the economy will enter a recession later this year.
Some analysts agree the economy could face trouble ahead. "Investors, policymakers, and politicians have now succumbed to a dangerous complacency," notes Stephen Roach, chief economist at Morgan Stanley, in a report. "That's the time to worry the most."
Others take a more benign view of recent low readings in investor fear gauges. "The apparent high level of investor complacency
is not at all a statement about investor sentiment, but it is a result of aggressive diversification," says Tom Sowanick, chief investment officer at Clearbrook Financial, in a note to clients. "Meager returns from fixed income and the shift in the global economic landscape favoring developing regions have led investors to more aggressively diversify their portfolios."
Among Monday's stocks in the news, TXU (TXU) was up about 13% after the electricity producer agreed to be acquired by a group of private equity firms for about $32 billion, or $69.25 per share, plus $12.38 billion in debt assumption.
Dow Chemical (DOW) was higher on a report the company might be the target of a $54 billion takeover by Kohlberg Kravis Roberts, Blackstone, and Carlyle Group.
Deal talk also bolstered shares of Tribune (TRB), as the newspaper publisher reportedly considered a proposal by real estate developer Sam Zell to take the company private.
Meanwhile, the board of Station Casinos (STN) agreed to $5.5 billion revised buyout offer from a group led by the company's founding family.
DaimlerChrysler (DCX) was reportedly considering swapping its North American Chrysler unit for a stake in General Motors (GM).
On the earnings front, XM Satellite Radio (XMSR) was lower after the company posted a narrower fourth-quarter loss but fell short of analyst expectations.
Nordstrom (JWN) was expected to report fourth-quarter earnings of 90 cents a share following the closing bell, says S&P.
In analyst calls, Merck was higher after Citigroup raised its recommendation the drugmaker from hold to buy.
Coca-Cola (KO) was higher after Deutsche Bank upgraded the beverage maker from hold to buy.
Elsewhere, Gilead (GILD) was slightly higher after the biopharmaceutical company said its GS-9137 class of HIV drugs met goals in a midstage study.
No major economic releases were due this session. In a speech, outgoing Fed Governor Susan Bies reiterated that problem subprime loans make up only a small part of the mortgage-lending universe.
The economic docket picks up Tuesday with data releases on durable goods orders, consumer confidence, and existing home sales.
In the energy markets Monday, April West Texas Intermediate crude oil futures rose 25 cents to $61.39 a barrel, its highest closing price of 2007, amid snowy weather and geopolitical concerns over Iran.
European markets finished higher. The FTSE-100 index in London rose 33.2 points, or 0.52%, to 6,434.7. Germany's DAX index added 35.01 points, or 0.5%, to 7,027.59. In Paris, the CAC 40 index was up 46.16 points, or 0.81%, to 5,762.54.
Asian markets ended mixed. In Japan, the Nikkei 225 index gained 26.93 points, or 0.15%, to 18,215.35. In Hong Kong, the Hang Seng index shed 203.7 points, or 0.98%, to 20,507.95. Korea's Kospi index edged up 0.15 points, or 0.01%, to 1,470.03.
Treasury yields extended Friday's slump amid worries about the subpime lending market and a Greenspan's warning about recession risks. The 10-year note rose in price to 99-31/32 for a yield of 4.63%. The 30-year bond jumped to 100-09/32 for a yield of 4.73%.