Stocks higher on deal hopes
NEW YORK (AP) – It was a roller coaster ride for the stock market on Monday that ended with major U.S. indexes closing mostly higher.
Traders were pulled in multiple directions. Stocks opened higher, fell in the afternoon, then mostly rose again in the last hour of trading.
Bank stocks fell after Bank of America said a financial error would force it to cancel its stock buyback plan and dividend increase, while health-care stocks rose after U.S. drug giant Pfizer renewed its pursuit of a merger with British rival AstraZeneca. Formerly highflying technology stocks fell again, dragging the Nasdaq composite index into the red.
The Standard & Poor’s 500 index rose 6.03 points, or 0.3 percent, to close at 1,869.43. The Dow Jones industrial average rose 87.28 points, or 0.5 percent, to 16,448.74 and the Nasdaq edged down 1.16 points, or 0.03 percent, to 4,074.40. The Nasdaq erased most of a 61-point loss.
Bank of America sank $1, or 6.3 percent, to $14.95 after it unexpectedly announced it would suspend its stock buyback program and dividend increase. 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.
Goldman Sachs and Citigroup each 1 percent following BofA’s announcement. JPMorgan Chase edged down 0.4 percent.
High-risk technology stocks were another area of weakness Monday as investors continue to cut their exposure to high-growth names and turn their focus to larger dividend-paying companies. Amazon fell $7.25, or 2.5 percent, to $296.58 after falling 10 percent on Friday. Netflix lost $7.87, or 2.4 percent, to $314.21 and Facebook fell $1.57, or 2.7 percent, to $56.14.
In contrast, “old” technology companies such as Microsoft, Apple and IBM, which have more mature businesses and pay quarterly dividends, rose 2 percent or more Monday.
High-growth technology and biotechnology stocks have been falling for several weeks now. The Nasdaq is down 3 percent in April, while the S&P 500 and Dow are roughly flat.
Traders say the selling has been coming from large investors, who have been moving out of high-growth stocks and into safer investments. The Russell 2000, an index made up mostly of smaller companies, is down 4.8 percent this month.
“When you have so many investors doing the same thing at the same time, you get these exaggerated moves in some of these stocks,” said Ian Winer, director of equity trading at Wedbush