US STOCKS-Wall St to dip after records, acquisitions eyed

Mon May 20, 2013 9:17am EDT

* Yahoo's board approves $1.1 bln Tumblr acquisition

* Freeport sweetens Plains Exploration deal

* Actavis to acquire Warner Chilcott in stock-for-stock deal

* Futures off: Dow 20 pts, S&P 2 pt, Nasdaq 4.75 pts

By Rodrigo Campos

NEW YORK, May 20 (Reuters) - U.S. stocks were set to dip at the open on Monday as investors search for catalysts after major U.S. equity indexes closed a fourth consecutive week of gains Friday.

Deals including Yahoo's $1.1 billion bid for Tumblr indicate that companies continue to search for growth through acquisitions despite record highs, a bullish sign for stocks.

The S&P 500 and Dow industrials finished Friday at fresh record highs and the Nasdaq Composite is at its highest since late 2000. A light economic and earnings calendar could leave the market vulnerable for a pullback, but those have been shallow and short-lived as investors take any weakness as a new chance to increase long positions.

"I'm not looking for a major down movement, but cautious sideways is probably what we are headed for," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Cardillo pointed to Federal Reserve chairman Ben Bernanke's testimony before Congress on Wednesday as the highlight of the week. The beginning of the end of the Fed's massive bond-buying program, which has given strong support to stock gains, might come sooner than many investors think if recent gains in the U.S. labor market hold.

S&P 500 futures dipped 2 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 20 points, and Nasdaq 100 futures shed 4.75 points.

Yahoo shares rose 0.8 percent in premarket trading after its board has approved a deal to buy blogging and social networking site Tumblr for $1.1 billion in cash.

Actavis confirmed it will acquire Warner Chilcott Plc in a stock-for-stock transaction valued at $5 billion. Actavis shares rose 2.3 percent in premarket trading and Warner Chilcott added 1.9 percent.

Freeport-McMoRan Copper & Gold and Plains Exploration & Production said they would pay shareholders more in dividends if they approved Freeport's roughly $6 billion takeover offer for Plains. Plains shares jumped 7.1 percent in premarket trading.

Pactera Technology International said it received a proposal from a Blackstone affiliate, its non-executive chairman and its chief executive to take the company private. Pactera shares rose 37 percent in light premarket trading.

Websense Inc shares jumped 28 percent premarket after it agreed to be acquired by Vista Equity Partners.

Solar products maker JA Solar Holdings reported another quarterly loss on lower prices for panels that convert sunlight into electricity, but its operating loss nearly halved from the first quarter of 2012. Its shares jumped 15.7 percent higher in light premarket trading.

Campbell Soup shares rose 2.9 percent premarket after the world's largest soup maker reported higher-than-expected quarterly earnings and raised its full-year forecast.

FILED UNDER: