New York – Stocks wilted Wednesday as comments from former Federal Reserve Chairman Alan Greenspan and worries about upcoming economic data deflated a rally fed by takeover activity.
Stocks initially rose, lifting the Dow Jones industrials briefly above 13,600 for the first time, after the market got a fresh load of deal-related news that included a possible bidding battle over aluminum producer Alcan Inc. But the excitement waned after a media report that Greenspan expressed concern that China’s stock market – which has recently been hitting record highs – could eventually see a sharp decline.
Wall Street’s mood also dampened when energy prices failed to ease despite a rebound in U.S. crude and gasoline inventories last week. And with key reports on durable goods and new-home sales due today and the long Memorial Day weekend looming, investors adopted a defensive stance.
Strong merger-and-acquisition activity has for weeks been the primary force lifting the Dow, which crossed over the 13,000 milestone less than a month ago. So after some cautionary comments from Greenspan, analysts were not surprised to see investors take a breather.
“He still carries a lot of clout,” said Steven DeSanctis, small- cap strategist with Prudential Equity Group, noting that U.S. investors are also very focused on the Chinese economy. “You get a data point like that, and people start to take profits.”
The Dow fell 14.30, or 0.11 percent, to 13,525.65, after climbing to an intraday trading record of 13,609.76.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 1.84, or 0.12 percent, to 1,522.28, still unable to finish above its record close of 1,527.46 set in March 2000.
The Nasdaq composite index slipped 10.97, or 0.42 percent, to 2,577.05, after briefly trading above 2,600 for the first time in more than six years.
