Dow drops amid fresh tor­rent of takeovers

Los Angeles Times - - Daily Market Roundup - Kate Gib­son Gib­son writes for Mar­ketwatch/McClatchy.

Stocks fell Mon­day, af­ter a four-week rally, de­spite a flurry of deal mak­ing. The Dow Jones in­dus­trial av­er­age dropped 48 points, al­though the blue-chip gauge re­mains on pace for its best Septem­ber per­for­mance since 1939.

“The stock mar­ket re­mains rea­son­ably val­ued, es­pe­cially when com­pared to the ul­tra-low in­ter­est rates seen in the bond mar­ket,” said Fred Dick­son, chief in­vest­ment strate­gist at Davidson Cos., who cal­cu­lates that eq­ui­ties are trad­ing at 12 times es­ti­mated 2011 Stan­dard & Poor’s 500 op­er­at­ing earn­ings.

Twenty-four of the Dow’s 30 com­po­nents were lower.

Bank of Amer­ica fell the most, down 2.7%, and AT&T led gains, up 1%.

“It is nor­mal to see pe­ri­odic short-term mar­ket pull­backs af­ter ex­tended ral­lies,” Dick­son said.

Wall Street’s up-and-down trade came with an­other round of deal mak­ing in the air­line, con­sumer prod­ucts and re­tail sec­tors.

South­west Air­lines said

it would ac­quire AirTran

Hold­ings for about $1.4 bil­lion. Con­sumer prod­ucts

maker Unilever agreed to pur­chase beauty-prod­ucts maker Al­berto Cul­ver for

$3.7 bil­lion, and Wal-Mart

Stores of­fered to pay nearly $4.3 bil­lion for South African dis­trib­u­tor Mass­mart Hold­ings.

Al­though the week’s first ses­sion was de­void of eco­nomic data, re­ports in com­ing days in­clude con­sumer sen­ti­ment, weekly job­less claims, man­u­fac­tur­ing and gross do­mes­tic prod­uct in the sec­ond quar­ter.

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