Stocks higher on deal hopes; BofA sinks
By KEN SWEET
the associated press | April 29,2014
Trader Michael Smyth works on the floor of the New York Stock Exchange on Monday. Stocks are mostly higher in early trading as traders hope for another blockbuster merger in the health-care industry.
NEW YORK — Stocks turned higher late Monday afternoon as a choppy day of trading drew to a close. Indexes swung in a wide range as investors tempered their enthusiasm over a potential $100 billion pharmaceutical deal with skepticism over Internet and other formerly highflying stocks.
Bank stocks mostly fell after Bank of America said it would have to suspend its stock buyback plan and a dividend increase.
KEEPING SCORE: The Standard & Poor’s 500 index was up seven points, or 0.4 percent, to 1,870 as of 3:45 p.m. Eastern time. The Dow Jones industrial average rose 100 points, or 0.6 percent, to 16,461. The Nasdaq composite edged up a point to 4,078. The three indexes moved between gains and losses all day.
BANK WORRIES: Bank of America sank 99 cents, or 6 percent, to $14.97. The bank discovered an error in how it calculates its capital ratio, a crucial measure of its strength. The Federal Reserve asked the bank to put its buyback and dividend increase on hold until the error was fixed.
Other banks also fell. Goldman Sachs fell 2 percent, while JPMorgan Chase and Citigroup were down roughly 1 percent.
PFIZER COURTS ASTRAZENECA: Pfizer renewed its push to buy British drug company AstraZeneca for $100 billion. The deal would be the latest big merger in the drug industry in recent weeks, if it happens. AstraZeneca jumped $7.62, or 11 percent, to $76.23. Pfizer rose $1.14, or 4 percent, to $31.89.
MORE PAIN FOR TECH: The Nasdaq took the brunt of the afternoon selling, as investors again ditched formerly highflying Internet and biotech stocks. Amazon fell $9.13, or 3 percent, to $294.70 after dropping 10 percent on Friday. Netflix lost $16, or 5 percent, to $305.97 and Facebook dropped $1.70, or 3 percent, to $56.
After snapping up tech stocks last year, investors have spent most of 2014 punishing them. The Nasdaq is down 3.6 percent in April, compared with a 1 percent fall in the S&P 500 and 0.8 percent decline in the Dow. The Nasdaq is on pace for its worst month since October 2012.
“The froth is finally burning off in some of these sectors like technology,” said Quincy Krosby, a market strategist at Prudential Financial. “Investors want to rely more on fundamentals, and it’s hard to justify some of these valuations.”
FED WATCH: The Fed will start a two-day policy meeting on Tuesday. The central bank is expected to further dial back its economic stimulus by reducing its monthly bond purchases to $45 billion. Those monthly purchases, which totaled $85 billion in December, have helped hold down long-term interest rates for consumers and businesses.
UKRAINE: Investors are watching the tensions between Ukraine and Russia. The White House announced additional sanctions against seven Russian officials and several companies in response to Russia’s annexation of Crimea. In a separate development, the mayor of Ukraine’s second-largest city was shot and wounded by an unidentified gunman.