The Dow shed more than 140 points on Monday, quickly giving back a big chunk of Friday's Bernanke-fueled triple-digit rally, as jitters ahead of this week's flood of economic data overshadowed another flurry of M&A action.
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The Dow Jones Industrial Average fell 140.92 points, or 1.39%, to 10009.73, the S&P 500 lost 15.67 points, or 1.47%, to 1048.92 and the Nasdaq Composite sank 33.66 points, or 1.56%, to 2119.97. The FOX 50 dropped 9.60 points, or 1.25%, to 760.21.
There didn't appear to be any new catalysts behind the ugly start to the week. In fact, Wall Street received good news in the form of the latest wheeling and dealing in the technology and pharmaceutical sectors and a rare upbeat report on the economy that showed an acceleration in consumer spending in July. The markets were unimpressed, however, ending the day at session lows.
The selloff also didn't appear to be backed up by much conviction as volume on the New York Stock Exchange was extremely light amid the historically-slow week before Labor Day.
“There’s not much to show this is a serious decline that investors should sit up and take notice of,” said Paul Nolte, managing director at Dearborn Partners, who chalked the selloff up to economic concerns ahead of Friday's jobs report. “Investors are now starting to question whether there are policy measures that can be implemented or passed that will help the unemployment situation. Investors are getting more concerned that there isn’t anything that can be done.”
The losses come after the Dow soared 165 points on Friday -- its best day in three weeks -- in response to a key speech from Fed chief Ben Bernanke on the state of the economic recovery.
Nearly every Dow lost ground on the day, led by Bank of America (NYSE:BAC), American Express (NYSE:AXP) and Intel (NASDAQ:INTC). The index's best performers were Pfizer (NYSE:PFE) and Hewlett-Packard (NASDAQ:HPQ), which closed higher after unveiling a stock buy back plan.
The financial sector provided the biggest drag on the markets on Monday, sinking 2% amid weakness from regional banks like PNC Financial (NYSE:PNC) and U.S. Bancorp (NYSE:USB).
On the economic front, the Commerce Department said consumer spending rose by an in-line 0.4% in July, an improvement from a 0.1% increase in June and a rare upbeat indicator on the status of the economic recovery. However, the government also said personal incomes increased just 0.2% last month. Consumer discretionary stocks like Macy's (NYSE:M) and Tiffany (NYSE:TIF) in the wake of the report.
Wall Street continues to take risk off the table ahead of Friday's unemployment report, which is expected to show the U.S. lost 120,000 jobs in July and the unemployment rate ticked higher to 9.6%. The markets have been rattled in recent weeks by new signs the economic recovery has lost steam. The weaker-than-expected recovery was acknowledged last week by Bernanke, the chairman of the Federal Reserve, who soothed the markets on Friday in a high-profile speech in Jackson Hole, Wyoming.
U.S. markets had little reaction to the latest batch of acquisitions as the M&A market has continued to show life. In its second deal this month alone, chip giant Intel unveiled a $1.4 billion all-cash deal to acquire the wireless unit of Infineon Technologies, which makes chips used in smart phones like Apple's (NASDAQ:AAPL) popular iPhone.
Also, drug maker Sanofi-Aventis (NYSE:SNY) went public with a $18.5 billion all-cash offer to acquire biotech giant Genzyme (NASDAQ:GENZ). Sanofi said it would pay $69 a share for Genzyme and hinted at the possibility of a hostile takeover after failing to reach a deal with Genzyme thus far. However, Genzyme rejected the bid, calling it "unrealistic" and saying now is not the right time to sell.
In the commodities complex, crude oil slid 47 cents a barrel, or 0.63%, to $74.70. Gold rose $1.50 a troy ounce, or 0.12%, to $1,237.10.
Hewlett-Packard's (NYSE:HPQ) shares rallied after the tech heavyweight unveiled plans to buy back an additional $10 billion of its stock despite being in the midst of a bidding war with Dell (NASDAQ:DELL) over data storage company 3Par (NYSE:PAR). H-P said it plans to buy back at least $3 billion of its stock in the fourth quarter and it still has $4.9 billion remaining from a prior buyback.
3M (NYSE:MMM) shelled out nearly $1 billion to scoop up biometric identification systems maker Cogent (NASDAQ:COGT) at a premium of almost 18%. The $10.50-a-share deal is aimed at boosting 3M's presence in the $4 billion global biometric market, which is expected to grow at a rate of at least 20% a year.
Google (NASDAQ:GOOG) reached a new licensing deal with The Associated Press that will allow the search giant to continue using the news agency’s content. Financial terms were not disclosed but the deal comes after years of public sparring over the matter.
Germany's DAX sank 0.65% to 5912.41 and France's CAC 40 lost 0.58% to 3487.01. The U.K.'s FTSE 100 was closed.
Japan's Nikkei 225 jumped 1.76% to 9149.26 and Hong Kong's Hang Seng gained 0.68% to 20737.22.