Stocks were expected to open lower Monday as traders reacted to Microsoft's (MSFT) decision to drop its bid for Yahoo (YHOO).
The deal's collapse reminds Wall Street of the weak mergers-and-acquisitions environment. Action Economics says Microsoft's decision "clouded M&A hopes in the tech sector." Yahoo shares were expected to open much lower on Monday, but shares of Microsoft and competitor Google (GOOG) should get a boost.
There were signs of other M&A activity on Monday, however.
Deutsche Telekom (DT) is weighing a bid for Sprint Nextel (S), the Wall Street Journal says. Deutsche Telekom already owns T-Mobile, so the combination would make it the largest wireless company in the U.S.
U.S. Airways Group is negotiating a possible merger with United Airlines' owner UAL Corp. (UAUA) after a deal with Continental (CAL) fell through, the Journal>/em> reports.
On Friday, the Dow Jones industrial average closed 48.20 points, or 0.37%, higher at 13,058.20. The broader S&P 500 index rose 4.56 points, or 0.32%, to 1,413.90. The tech-heavy Nasdaq composite index fell 3.72 points, or 0.15%, to 2,476.99.
On the New York Stock Exchange, 17 stocks were higher in price for every 13 that declined. Trading breadth on the Nasdaq was 15-12 negative.
Oil was trading higher on Monday. On the NYMEX, crude oil for June delivery was up 42 cents to $116.74 per barrel.
Among stocks in the news, Boeing (BA) reportedly is dealing with even more delays developing its new 787 Dreamliner aircraft.
Marvel Entertainment (MVL) posted earnings of 58 cents per share, vs. 54 cents a year ago. Lower costs and a drop in shares outstanding offset a 26% drop in sales. The firm raised its 2008 guidance.
Hewitt Associates (HEW) reported earnings of 43 cents per share, vs. 12 cents a year ago, as revenue rose 8%.
CMS Energy Corp. (CMS) posted earnings of 44 cents per share, vs. 42 cents a year ago. The firm saw a slight drop in revenue, but lower costs. CMS reaffirmed previous earnings guidance for 2008.
Continental Resources (CLR) reported earnings of 52 cents, vs. 34 cents a year ago, as revenue rose 88%. Due to more drilling and oil recovery activity, the firm expects production to increase 42% by the end of the year.
Major European indexes were mixed Monday. In London, the FTSE 100 index was up 2.11% to 6,215.50. Paris' CAC 40 index lost 0.3% to 5,054.56, and Germany's DAX index edged down 0.09% to 7,037.12.
In Asia, Japan's Nikkei 225 was up 2.05% to 14,049.26, while Hong Kong's Hang Seng index fell 0.22% to 26,183.95.
Treasury market
Treausries were moving higher as the bond market awaited a ISM Nonmanufacturing index report, due later Monday morning. Two-year Treasury notes were up 03/32 to 99-15/32 for a yield of 2.41%; the 10-year Treasury rose 04/32 to 97-09/32 for a yield of 3.841%; and the 30-year bond gained 07/32 to 97-01/32 for a yield of 4.562%.