Stocks end lower after Microsoft pulls Yahoo bid
Microsoft had offered $47.5 billion to buy Yahoo Inc., but scrapped the bid late Saturday after the software maker and the Internet provider could not agree on a sale price. The failed deal came as a disappointment to Wall Street, as merger-and-acquisition activity tends to boost shareholder value, and also signals to the broader market that corporate America is optimistic about the future.
A jump in oil prices raised concerns that inflation could force consumers, who account for more than two-thirds of the economy, to cut their spending on discretionary items. Crude oil futures for June delivery surged to a new trading high of $120.36 a barrel on the New York Mercantile Exchange before pulling back to settle up $3.65 at a record $119.97. The jump followed worries over supply disruptions in areas such as Nigeria, Iran and Iraq.
"Energy is a very important piece," said Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, referring to the mood of both investors and consumers. "It's the price at the pump, it's what people read about."
There is a growing sense on Wall Street that the Fed is in the process of putting its rate cuts on hold, and accelerating inflation would make such a pause more likely.
The Dow Jones industrial average fell 88.66, or 0.68 percent, to 12,969.54.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 6.41, or 0.45 percent, to 1,407.49, while the Nasdaq composite index fell 12.87, or 0.52 percent, to 2,464.12.
Bond prices rose as stocks declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.84 percent from 3.86 percent late Friday. In late trading, however, bond prices declined, and the 10-year yield rose to 3.87 percent.
Gold prices also climbed and the dollar traded mixed against other major currencies.
John Merrill, chief investment officer at Tanglewood Capital Management in Houston, noted that despite investors' concerns about the economy, Wall Street has logged a sizable rebound since its March lows. He said the back-and-forth in stocks is to be expected, particularly after recent gains.
Last week, the Dow rose 1.29 percent, while the S&P 500 advanced 1.15 percent.
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