Deal activity in tech stocks fails to boost Wall Street

Dow Jones: 12,393.90 (–6.13) SP 500: 1,332.63 (–0.24) Nasdaq: 2,791.19 (+2.00)

THE S&P 500 failed to break a key technical resistance level for a second day yesterday, as low trading volume raised further questions about the market’s strength.

The broader market index closed slightly below 1,333, a closely watched level as it represents a doubling from the low reached in March 2009.

“The [low] volume is a sign that there is little conviction from sellers in this market,” said Jeff Kleintop, chief market strategist for LPL Financial in Boston.

“Those wishing for more volume should be careful what they wish for since a rebound in trading volume may come with the return of volatility, rather than the steady gains we have seen since last summer,” he said.

Minutes of the last Federal Reserve meeting showed some Fed officials believed the US central bank should tighten conditions before year-end. Stock market reaction was muted.

Chip stocks were supported after Texas Instruments late Monday offered to buy National Semiconductor in a deal worth $6.5 billion, a premium of 78 per cent. The PHLX semiconductor index rose 2.3 per cent.

The Dow Jones industrial average slipped 6.13 points, or 0.05 per cent, to end at 12,393.90.

The Standard & Poor’s 500 Index inched down just 0.24 of a point, or 0.02 per cent, to 1,332.63.

The Nasdaq Composite Index rose 2.00 points, or 0.07 per cent, to 2,791.19.

The weighting of Apple was slashed, though it remains the biggest component of the Nasdaq 100. The stock was down 0.7 per cent at $338.89 after earlier falling as much as 1.5 per cent.

The announcement of a merger with Texas Instruments drove National Semi shares up 71 per cent to $24.06. Texas Instruments added 1.7 per cent to $34.69.

“Tech stocks are leading this big wave of merger and acquisition activity, which people are trying to position themselves ahead of and which I expect to continue,” said James Swanson, chief investment strategist at Boston-based MFS Investment Management, which oversees about $200 billion.

KB Home shares dropped 4.2 per cent to $11.69 after it reported a first-quarter loss that widened from the previous year. – (Reuters)