U.S. Stocks Weaken As Microsoft Pulls Yahoo Offer
NEW YORK (MarketWatch) -- Stocks declined on Monday after Microsoft Corp. dropped its $50 billion offer for Yahoo Inc. and an analyst said Bank of America Corp. should abandon its pending takeover of Countrywide Financial Corp.
Higher energy preices also kept the pressure on U.S. equities.
The Dow Jones Industrial Average slid 76.04 points to 12,982.16, with 25 of its 30 components trading in the red. Shares of General Motors Corp. and American Insurance Group Inc. led the blue-chip decliners, both down 2.7%.
Also weighing on the Dow, shares of Bank of America fell 1.7%, retreating after Friedman Billings Ramsey & Co. Paul Miller Jr. said the bank was likely to negotiate a sharply lower price for Countrywide but should just consider walking away, as Countrywide's loan portfolio "will prove a drag on earnings."
Shares of Countrywide , the nation's biggest mortgage company, also fell, recently down 12.9%.
Blue-chip gains were led by Microsoft , shares of which were up 1.9% in the wake of its weekend decision to pull the plug on its takeover attempt of Internet portal Yahoo
.
Outside the Dow, shares of Yahoo were down 14.2%.
The S&P 500 shed 5.19 points to 1,408.71, with financials leading the decline among S&P component sectors, off 1.8%, followed by utilities, down 1.4%.
Advancing sectors on the S&P included energy, up 1.7%, and materials, up 0.02%.
The technology-heavy Nasdaq Composite declined 6.4 points to 2,470.59.
The major indexes briefly pared opening losses after the Institute of Supply Management said its gauge of non-manufacturing activity in the services sector expanded in April, ending a string of three months of contraction. .
"The April headline print for the non-manufacturing index of the ISM is encouraging but most likely exaggerates the degree of health in the economy. All the talk of a V-shaped recovery is in our view premature," said Stephen Stanley, chief economist at RBS Greenwich Capital.
On the New York Stock Exchange, 1.2 billion shares changed hands, and declining stocks topped those advancing about 3 to 2. On the Nasdaq, 879 million issues were traded, and declining stocks surpassed those on the rise by more than 7 to 6.
Crude-oil futures surged nearly $4 to above $120 a barrel for the first time on concerns about supply disruptions and weakness in the U.S. dollar, with the contract for June delivery recently up $3.28 at $119.60 a barrel, after hitting a high of $120.21 earlier on the New York Mercantile Exchange. .
In the Nymex metals pits, gold for June delivery gained $12.20 to $870.20 an ounce. .
European shares weakened a touch on Monday. London was closed for a holiday.
By Kate Gibson