New York – Stocks retreated from historically lofty levels Monday as rising oil prices chilled investor enthusiasm for strong earnings reports and new takeover activity. The Dow Jones industrials came within 17 points of 13,000 before pulling back.
The blue-chip index hit a new trading high of 12,983.92 after British bank Barclays PLC said it will acquire Dutch bank ABN Amro NV for $91.16 billion, and British drugmaker AstraZeneca PLC said it will buy U.S. drugmaker MedImmune Inc. for $15.6 billion. Though the U.S. economy has been slowing and the dollar has been weakening, global takeover activity remains robust, giving investors reason to believe U.S. companies will keep finding ways to pull in profits.
But the market was still vulnerable to a downturn. Corporate growth is slower than it has been in years, and investors grew cautious as they awaited more clues about the direction of the economy. Monday’s spike in crude-oil prices above $65 a barrel reignited inflation worries and reminded Wall Street that other economic obstacles exist as well, such as the weak dollar and a slow housing market.
Analysts said investors were trading deliberately – and avoided succumbing to pre- 13,000 euphoria. Although the Dow passed 12,000 only in October, there appeared to be little of the kind of frenzy that drove the market’s major indexes to record after record during the dot-com boom.
“Any time you approach a new milestone – especially 13,000, which is a psychological barrier – it’s not going to happen overnight. It’s going to take some time,” said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.
The Dow Jones industrial average fell 42.58, or 0.33 percent, to 12.919.40.
The broader Standard & Poor’s 500 index fell 3.42, or 0.23 percent, to 1,480.93. The index is about 3 percent from its record close of 1,527.46, reached in March 2000.
The technology-dominated Nasdaq composite index lost 2.72, or 0.11 percent, to 2,523.67. It stands at about half its record closing level of 5,048.62, also reached in March 2000.
The dollar’s recent drop is not necessarily bad for the U.S. economy; it makes U.S. goods comparatively cheaper and therefore more attractive to foreign importers.
