Dow drops amid fresh torrent of takeovers
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.