Posted on Tue, Apr. 8, 2008
NEW YORK - Wall Street started the week with a narrowly mixed performance yesterday, with many investors moving to the sidelines as they waited for quarterly profit reports.
Stocks had popped higher yesterday, extending last week's big advance on talk of a $5 billion private-equity investment in Washington Mutual Inc. The nation's largest thrift is reportedly in discussions with buyout shop TPG Capital and other investors about selling a stake in itself in return for cash.
But investors decided to play it a little safer late in the day - especially with Alcoa Inc.'s announcing its first-quarter results after the close.
Alcoa was the biggest loser among the 30 Dow Jones industrials, falling $1.56, or 4.00 percent, to $37.44 ahead of its earnings release. The aluminum company said it had a 54 percent drop in first-quarter net income, a sharper decline than the market expected. Its shares were little changed in after-hours trading.
The broader market started pulling back when the Standard & Poor's 500 index began approaching the levels where it stood before Wall Street's massive sell-off in early March, noted Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
"When the market closes, first-quarter earnings kick up - it looks like people are taking money off the table ahead of those," Detrick said. "We had a good rally. We're thinking the next major driver will be those earnings reports."
The Dow rose 3.01, or 0.02 percent, to 12,612.43, after rising more than 120 points earlier in the day and finishing last week up 393.02, or 3.22 percent.
Broader stock indicators were mixed yesterday. The S&P 500 index closed up 2.14, or 0.16 percent, at 1,372.54. The Nasdaq composite index fell 6.15, or 0.26 percent, to 2,364.83.
Though the stock market has not recovered all the ground it lost last month, when the credit crisis reached a critical point and led to the buyout of the Bear Stearns Cos. Inc., investors launched a strong comeback last week. Wall Street is growing more optimistic that stocks and the companies that issue them may be starting to rebound from a long slump due to tight credit and a sluggish economy.
After news that Washington Mutual might sell a stake for cash - a move that other banks such as Citigroup Inc., Merrill Lynch & Co. Inc. and Morgan Stanley have also made - WaMu shares shot up $2.98, or 29.30 percent, to $13.15. Other banks rose as well. Merrill rose $1.30, or 2.81 percent, to $47.55, Bear Stearns rose 20 cents to close at $10.67, and Goldman Sachs rose $3.33 to close at $178.73.
In other deal-making news, Swiss pharmaceutical-maker Novartis AG said it would spend about $38 billion in a two-step bid for a majority stake in U.S. eye-care company Alcon Inc. Alcon rose $2.19 to close at $150.63, and Novartis fell $2.12, or 4.07 percent, to $50.00.
Discover Financial Services L.L.C. said it was buying the Diners Club International Ltd. card network from Citigroup for $165 million. Discover rose 95 cents, or 5.54 percent, to $18.09, while Citi rose 52 cents, or 2.16 percent, to $24.60.
And Microsoft Corp. gave Yahoo Inc. a three-week deadline to agree to a takeover, or, Microsoft said, it would launch a proxy fight for control of the company. Yahoo fell 66 cents, or 2.33 percent, to $27.70, while Microsoft closed flat at $29.16. Yahoo said the deal was not in the best interests of its shareholders and called Microsoft's proxy threat counterproductive.
Light, sweet crude rose $2.86 to settle at $109.09 a barrel on the New York Mercantile Exchange. Gold prices also increased, and the dollar gained against most other major currencies.
