U.S. stocks fell on Monday, after a report showing weaker-than-expected March factory activity revived concerns about the economy's health and a rise in inflation.
The data reversed an advance by stocks sparked by several large takeovers or news of possible deals.
The Institute for Supply Management said factory activity grew in March but at a slower rate than in February and less than analysts had forecast.
It also showed a jump in an inflation component, suggesting rising price pressures could dissuade the Federal Reserve from cutting interest rates soon even as growth slows.
"This (data) is not a number that should support the market. It's highlighting the weakening economy and the inflationary concern that has yet to give the Fed reason to cut interest rates," said Barry Hyman, equity market strategist at EKN Financial Services Inc in New York.
The Dow Jones industrial average (DJI:
^DJI -
News) was down 14.14 points, or 0.11 percent, at 12,340.21. The Standard & Poor's 500 Index (
^SPX -
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^IXIC -
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Shares of interest-rate sensitive sectors, including banks, led losses, with shares of Citigroup Inc. (NYSE:
C -
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BAC -
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Takeover news, including a $29 billion proposed buyout of First Data Corp. (NYSE:
FDC -
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Shares of Citigroup dropped to $50.62 on the New York Stock Exchange, where shares of Bank of America fell to $50.24.
On Nasdaq, shares of Microsoft Corp. (NasdaqGS:
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But First Data shares jumped 21.2 percent to $32.69 after the credit-card and payment processor said it had agreed to be bought by private equity firm Kohlberg Kravis Roberts & Co. (KKR.UL). The announcement by First Data valued the deal at $29 billion -- the second largest buyout ever. For details, see (ID:nN02384673).
The sell-off in banking shares also followed a profit warning from M&T Bank Corp. (NYSE:
MTB -
News), whose stock dropped 7.9 percent to $106.60, after it said late on Friday problems in mortgages with limited income documentation would hurt results. For more on the subprime mortgage market, see (ID:nN16195443).
About 63 banks, or 12.5 percent of U.S.-listed banks, traded within $1 of or below their 52-week lows, according to Reuters data.
Published by Ellis Mnyandu
Labels: BAC, C, DJI, FDC, IXIC, MSFT, MTB, SPX