US stocks slipped yesterday, as an early bounce on Osama bin Laden’s death gave way to questions around the longevity of the market’s recent rally.
The impact of bin Laden’s death by US forces on financial markets prompted a quick flurry of buying, which was viewed as an emotional response. The Dow swung 92 points from its high of the day to its low.
“His death should not have affected the markets much ... (but) just people feeling a little better about the world sometimes impacts the stock market,” said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
Energy and materials were the weakest performers. Investors pulled back from shares that have outperformed lately following declines in commodities. The S&P energy index was down 1.3 per cent.
US crude prices ended lower but were off the sharp declines that immediately followed word of the al Qaeda leader’s killing, and silver dipped after a recent rally.
Yesterday’s fall followed the Dow’s and Nasdaq’s posting their best monthly gains since December, and analysts forecast little resistance for the S&P 500 until 1,400.
“We’ve seen a great stock market this year, and that shows you that the broader economy is what’s important,” Evans said.
Stocks also were helped by merger and acquisition announcements, which often reflect optimism about the longer-term outlook. The S&P 500 is up 30 per cent since the start of September, roughly when the current rally began.
The Dow Jones industrial average was down 3.18 points, or 0.02 per cent, at 12,807.36. The Standard & Poor’s 500 Index was down 2.39 points, or 0.18 per cent, at 1,361.22. The Nasdaq Composite Index was down 9.46 points, or 0.33 per cent, at 2,864.08.
The CBOE Volatility Index, Wall Street’s fear gauge, rose 8.8 per cent. The VIX index, which often moves inversely to the S&P 500, measures the cost of hedges or protection investors are willing to pay against a fall in the S&P 500.
Among the deal news, Israel-based Teva Pharmaceuticals will buy Cephalon for $6.8bn, and Arch Coal will acquire International Coal Group for $3.4bn.
US-listed shares of Teva rose 3.4 per cent to $47.27, while Cephalon gained 4 per cent to $80.11. Arch shares were down 2.2 per cent at $33.53, but International Coal soared 30.8 per cent to $14.43 and was the among the most actively traded stocks on the New York Stock Exchange.
In addition, Community Health Systems raised its bid for Tenet Healthcare by $1.75 per share to $7.25.
Community Health fell 1.7 per cent to $30.22, and Tenet dropped 3.5 per cent to $6.69.
In other deal news, Nasdaq OMX Group and IntercontinentalExchange took their $11bn takeover bid for NYSE Euronext directly to the Big Board’s shareholders with a tender offer. NYSE shares were up 0.8 per cent at $40.40, while Nasdaq shares were up 0.07 per cent at $27.14.