Stocks Erased Losses; Narrowly Mixed

Published on Monday, 02 July 2012 16:42 Written by Christopher Lynn

New York, July 2^nd (TradersHuddle.com) – Stocks erased their losses, with the major benchmark indices ending mixed for the session. Further stimulus hopes by the Fed, helped cut losses, which followed a disappointing manufacturing report.

The Dow Jones Industrial Average lost 8.70 points, or 0.07%. The S&P 500 index climbed 3.35 points, or 0.25%, while the NASDAQ gained 16.18 points, or 0.55%.

The market started the session in the shortened holiday week with a slight bid after a flurry of M&A activity amid a relatively quiet and mixed overseas session. Chinese PMI weakened, which weighed on sentiment, spurring global growth concerns.

Quest Software (NASDAQ: QSFT) agreed to be acquired by Dell (NASDAQ: DELL) for $28 per share, just slight premium from Friday Close, as the stock has received a bid earlier on rumors of a potential takeover. Bristol Myers Squibb (NYSE: BMY) agreed to acquire Amilyn Pharmaceuticals (NASDAQ: AMLN) for $31 per share or $5.3 billon, representing a 10% premium from the prior session close.

Micro Technology (NASDAQ: MU) jumped 3.8% on news that it will buy bankrupt Japanese chipmaker Elpida in a deal valued at about $750 million.

Another deal was made by Ingram Micro (NYSE: IM), which agreed to acquire Brightpoint (NASDAQ: CELL) for $9 per share, or a premium of more than 60% from the closing price from Friday’s session. Meanwhile, German gas firm Linde Group agreed to acquire Lincare Holdings (NASDAQ: LNCR) for $41.50 per share in a transaction valued in $4.6 billion.

The early upside move was short lived after the ISM reported that its manufacturing index unexpectedly contracted for the first time since 2009, as it slid to 49.7 in June from a reading of 53.5 in May. Meanwhile construction spending climbed 0.9% to an annual rate of $830.0 billion in May, hitting its highest level in nearly 2-1/2 years.

Among the S&P 500 sectors, industrials and materials slumped, while utilities, financials, technology, and consumer staples logged the biggest gains. In the materials sector, DuPont (NYSE: DD) weighed on both the sector and the Dow Jones Industrial Average. The third largest chemical maker tumbled 2.25% to $49.43, posting the biggest decline in the blue chip index, after Jefferies downgraded the stock to a Hold from Buy and cut its price target to $55 from $62.

In technology space, Micron Technology was among the top performers, while Dell lost 1% to $12.39 on news of the deal for Quest Software. Apple (NASDQQ: AAPL) climbed 1.46% to $592.52 after the company said that it reached a settlement with China’s Proview to settle the lawsuit regarding the iPad trademark, which threatened the iPad sales in China.

In the consumer space, Constellation Brands (NYSE: STZ) continued its surge from the prior session and added another 6.5% after Cannacord Genuity raised its estimates and target price to $30 from $28 after the agreement to purchase the 50% of the Crown Imports venture it does not currently own and after the company beat earnings expectations last week. Constellation posted the best percentage gain in the S&P 500.

Best Buy (NYSE: BBY) was another top performer, jumping 5.9% on ongoing speculation that that founder Dick Schulze may take the consumer electronics retailer private, while Groupon (NASDAQ: GRPN) slumped more than 10% after Susquehanna slashed its target price on the stock to $12 from $15.

Elsewhere, Facebook (NASDAQ: FB) lost 1% to $30.771, adding to last week decline of 5.5%. Facebook pulled back from $33 per share last week amid concern over revenue growth, valuation, and after analysts issued mixed ratings following the expiration of the IPO’s quiet period.

Barclays (NYSE: BCS) jumped more than 4% on news that its Chairman Marcus Aglus resigned from the board after the lender agreed to pay $450 million to settle an international probe over Libor rates manipulations.