While you were sleeping: AT&T slips after deal
May 20 (BusinessDesk) – Wall Street inched higher as investors remained cautious with equities trading near record highs, even as companies such as AT&T were confident enough to do some of the largest takeover deals in history.
With about an hour of trading left in the day in New York, the Dow Jones Industrial Average gained 0.14 percent, the Standard & Poor’s 500 Index rose 0.34 percent, while the Nasdaq Composite Index added 0.77 percent. Both the Dow and S&P 500 enjoyed record highs last week.
“This is the least believed bull market that I’ve ever seen,” Robert Doll, chief equity strategist at Nuveen Asset Management in Chicago, told Bloomberg News. “From here it’s earnings, it’s fundamentals, it’s can the economy grow? And my guess is the answer to that question is yes.”
Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said stocks remain a relatively appealing place for investors, at least for now.
"The listlessness in the market shows the struggle investors are having right now: Valuations are full but not stretched, and there's a lack of decisive evidence that the economy will kick into higher growth and justify these valuations," Luschini told Reuters. "Equities remain a better choice than bonds or cash this year, but on a near-term basis, they might succumb to gravity."
Gains in shares of Walt Disney, last up 1.1 percent, and JPMorgan Chase, last up 0.9 percent outweighed declines in shares of AT&T, down 1.7 percent, and McDonald’s, down 0.9 percent.
Shares of AT&T were down after the company on Sunday said it agreed to buy DirecTV for US$48.5 billion.
“Strategically, this makes a lot of sense for AT&T,” Jan Dawson, an analyst with Jackdaw Research in Provo, Utah, told Bloomberg News. Gaining a satellite-TV provider “lets them go national with a video offering that matches their wireless reach.”
Shares of Pfizer rose, last up 0.8 percent, after AstraZeneca rejected Pfizer’s latest takeover deal. Shares of AstraZeneca plunged 11.1 percent.
"Pfizer's chances are going down, despite its offer of a higher price," Erik Gordon, professor at the University of Michigan's Ross School of Business, told Reuters.
Shares of other drug makers slid as a result. Share of GlaxoSmithKline fell 1.4 percent while Novartis gave up 0.6 percent.
Europe’s Stoxx 600 Index ended the day with a 0.1 percent decline from the previous close. The UK’s FTSE 100 fell 0.2 percent. Germany’s DAX and France’s CAC 40 each added 0.3 percent.
Investors will eye minutes from the US Federal Reserve’s latest meeting, scheduled to be released on Wednesday. The same day Chairman Janet Yellen is set to deliver a commencement address to NYU graduates at Yankee Stadium.
In Europe, borrowing costs are widely expected to fall in June. Following European Central Bank President Mario Draghi’s signal earlier this month that the bank would be “comfortable” with easing monetary policy in June, 90 percent of economists polled by Bloomberg News now predict the ECB will follow through.