Despite a rebound by financial stocks and a batch of merger news,
the stock market was unable to put together a sustainable advance. Stocks
finished with a broad-based loss, a bit above session lows.
Uncertainty in foreign indices fueled early losses in the headline
indices. Financials were the focal point of the weakness, falling to a loss of
2.2%. The drop was short-lived, though. Financials rallied to a gain of 5.3%,
but finished with a gain of 2.5%.
Though financials helped the broader market move into positive
territory, the stock market was unable to break above the prior session's high
and began trending lower to finish in the red.
Billionaire and famed value investor Warren Buffett seemed unsure
about the short-term direction of the economy and the stock market during a
CNBC interview, but remains confident in the long-term potential of the
Buffett suggested that Wells
Fargo (WFC 9.97, +1.36), which is one of his holdings, will
emerge from current doldrums with greater earnings power than ever. Shares of
WFC provided leadership to the financial sector.
There have been no new tangible developments regarding solutions
for the troubles of banks and financial companies, but traders remain mindful
that congress is expected to hold meetings this week regarding mark-to-market
accounting rules. Treasury will unveil further details regarding its plan to
handle banks' toxic assets in coming weeks, according to Reuters.
Less than two months after Pfizer
(PFE 12.63, -0.10) announced it will acquire Wyeth (WYE 40.76, -0.07) for nearly $68 billion in cash
and stock, Merck (MRK
20.99, -1.75) and Schering-Plough
(SGP 20.10, +2.47) announced they will merge their companies. The consolidation
among major pharmaceutical companies comes as they look to fatten product
pipelines and fend off generic competition.
Merck is proposing to pay Schering-Plough shareholders 0.5767
shares of MRK and $10.50 in cash for each share of SGP. Based on MRK's closing price last week, the deal is valued at $41.1
billion, or $23.61 per share of SGP.
Merck's offer hasn't altered its expectations for 2009. The company
reaffirmed its earnings forecast, which ranges from $3.15 to $3.30 per share.
Wall Street expects the company to earn $3.26 per share.
Meanwhile, reports indicate merger talks between Genentech (DNA 92.63, +1.77) and
Roche are progressing toward a deal. As of this writing, Roche is expected to
pay $95 for each share of Genentech.
Merger news didn't stop there, though. CNBC reported that Dow Chemical (DOW 6.32, -0.79) has
agreed to pay $78 in cash for each share of Rohm & Haas (ROH 74.91, +11.11). However, subsequent
reports indicated the two companies have not yet reached a deal, and trial
proceedings are set for Tuesday morning. (Note: shares of both companies remain
halted; the price quotes reflect the change in price prior to being halted)
Despite what would ordinarily be considered positive catalysts,
neither the health care sector (-0.9%), the materials sector (-1.1%), nor the
broader market celebrated the announcements.
Beyond financials, energy was the only other sector to close the
session with a gain. Energy stocks advanced just 0.5%, largely due to a 3.5%
gain in crude oil prices. Crude gained 3.5% to close at $47.10 per barrel amid
speculation OPEC will further slash output when it meets March 15.DJ30 -79.89
NASDAQ -25.21 NQ100 -2.0% R2K -2.2% SP400 -0.9% SP500 -6.85 NASDAQ Adv/Vol/Dec 752/2.06 bln/1941 NYSE Adv/Vol/Dec
888/1.56 bln/2207