New York – Wall Street extended its decline Monday as concerns about a market correction offset investor optimism that acquisition activity is on pace to set a record this year.
The $45 billion buyout of electric utility TXU Corp. injected confidence into the market that merger-and-acquisition activity could surpass last year’s record $4 trillion level. The deal, led by a consortium headed by Kohlberg Kravis Roberts & Co. and Texas Pacific Group, would go down as the largest leveraged buyout in U.S. history.
Other deals included Station Casinos Inc., which agreed to be bought by a private-equity firm started by the company’s founding family. Temple-Inland Inc., a conglomerate that offers products and services including packaging material and financial services, plans to separate itself into three stand- alone public companies.
However, stocks were unable to sustain gains amid speculation that the market may be due for a correction. Hanging over the market is a lack of catalysts that could propel stocks forward, especially ahead of an expected downward revision of fourth- quarter gross domestic product to be released Wednesday.
“Despite the buyout news, we’re seeing the broader market a little concerned that we’ve had such strength without a correction,” said Peter Dunay, an investment strategist with New York-based Leeb Capital Management. “We may be in a period where the market wants to step back for a bit.”
The Dow Jones industrial average fell 15.22, or 0.12 percent, to 12,632.26. The index has had 31 record closes since the beginning of October and is up about 8 percent in that time.
Broader stock indicators also fell. The Standard & Poor’s 500 index was down 1.82, or 0.13 percent, at 1,449.37, and the Nasdaq composite index fell 10.58, or 0.42 percent, to 2,504.52. The Nasdaq was the only index that finished last week in positive territory, while the Dow and S&P dipped.
Bonds continued to rise from last week’s sell-off, with the yield on the benchmark 10-year Treasury note falling to 4.63 percent from 4.67 percent late Friday.
Todd Salamone, director of trading at Schaeffer’s Investment Research in Cincinnati, said investors remain nervous because the S&P 500 hasn’t had a 2 percent correction in 121 sessions.
“Some selling is actually good for the market. There’s less of a possibility for any panic selling if we do decline because they’ll already be out of the market,” he said.
