Stocks higher on deal hopes; BofA sinks

Published on NewsOK Modified: April 28, 2014 at 4:17 pm •  Published: April 28, 2014
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NEW YORK (AP) — It was a choppy ride for the stock market on Monday that ended with major U.S. indexes closing mostly higher.

Traders were pulled in multiple directions. Stocks opened higher, fell in the afternoon, and then rose again in the last hour of trading.

Bank stocks fell after Bank of America said a financial error would force it to cancel its stock buyback plan and dividend increase, while health-care stocks rose after U.S. drug giant Pfizer renewed its pursuit of a merger with British rival AstraZeneca. Formerly highflying technology stocks fell again, dragging the Nasdaq composite index into the red.

The Standard & Poor's 500 index rose 6.03 points, or 0.3 percent, to close at 1,869.43. The Dow Jones industrial average rose 87.28 points, or 0.5 percent, to 16,448.74 and the Nasdaq edged down 1.16 points, or 0.03 percent, to 4,074.40. The Nasdaq erased most of a 61-point loss.

Bank of America sank $1.00, or 6.3 percent, to $14.95 after it unexpectedly announced it would suspend its stock buyback program and dividend increase. The bank discovered an error in how it calculates its capital ratio, a crucial measure of a bank's financial strength. The Federal Reserve asked the bank to put its buyback and dividend increase on hold until the error was fixed.

Goldman Sachs and Citigroup each 1 percent following BofA's announcement. JPMorgan Chase edged down 0.4 percent.

High-risk technology stocks were another area of weakness Monday as investors continue to cut their exposure to high-growth names and turn their focus to larger dividend-paying companies. Amazon fell $7.25, or 2.5 percent, to $296.58 after falling 10 percent on Friday. Netflix lost $7.87, or 2.4 percent, to $314.21 and Facebook fell $1.57, or 2.7 percent, to $56.14.

In contrast, "old" technology companies such as Microsoft, Apple and IBM, which have more mature businesses and pay quarterly dividends, rose 2 percent or more Monday.

High-growth technology and biotechnology stocks have been falling for several weeks now. The Nasdaq is down 3 percent in April, while the S&P 500 and Dow are roughly flat.