US STOCKS-Market near flat as M&A, economy weighed
(Updates to close)
By Jennifer Coogan
NEW YORK, April 28 (Reuters) - U.S. stocks ended little changed on Monday after the biggest U.S. takeover deal proposed this year helped offset the comments by influential investor Warren Buffett, one of the deal's backers, that the country could face a long and deep recession.
Signs of life stirred in the moribund merger-and acquisition market when Mars Inc, the maker of M&Ms candy, offered to buy Wm Wrigley Jr Co WWY.N, the world's largest chewing gum maker. Buffett's Berkshire Hathaway (BRKa.N) will help finance the $23 billion acquisition.
The deal underscored the notion that stocks are relatively cheap, with valuations hovering near their lowest in more than a dozen years. That helped financial stocks overcome a report from Morgan Stanley that predicted more profit headwinds for several large U.S. banks, including Bank of America Corp (BAC.N).
Buffett, however, told CNBC television that the United States could be mired in a longer and deeper recession than most people think.
"Without this deal, it would have ended up being a down day because of the financials," said Jim Awad, chairman of W.P. Stewart Asset Management, in New York. "I think everybody should be happy it happened. It shows there's still credit available, but it wouldn't have been possible without Buffett."
The Dow Jones industrial average .DJI slipped 20.11 points, or 0.16 percent, to 12,871.75. The Standard & Poor's 500 Index .SPX inched down 1.47 points, or 0.11 percent, to 1,396.37. But the Nasdaq Composite Index .IXIC edged up 1.47 points, or 0.06 percent, to 2,424.40.
On the Nasdaq, shares of Microsoft Corp (MSFT.O) declined 2.8 percent to $28.99 after Yahoo Inc (YHOO.O) let the deadline for it to respond to the software maker's threat to take its takeover bid for the Internet company directly to shareholders pass with no new development. Yahoo shares fell 1.4 percent to $26.43.
Shares of Google Inc (GOOG.O), a competitor of both Yahoo and Microsoft, gained 1.5 percent to $552.12. Google was a top contributor to the Nasdaq's gain.
Wrigley stock jumped 23.2 percent to $76.91.
Shares of Hershey Co (HSY.N), a Mars competitor, gained 4.6 percent to $36.35 on speculation that the Wrigley/Mars deal will compel a tie-up between the U.S. confectioner and Britain's Cadbury Schweppes Plc (CBRY.L).
Interest from another billionaire investor helped lift shares of Ford Motor Co. Kirk Kerkorian's Tracinda Corp said it intends to make a cash tender offer for up to 20 million shares of the automaker's common stock at $8.50 per share, which would give him a 5.6 percent stake in Ford. [ID:nN28463132].
Ford stock rose 9.5 percent to $8.21, while shares of its rival, General Motors Corp GM.N advanced 2.6 percent to $21.94.
Trading volume was faint as investors turned cautious before the Federal Reserve's meeting to decide interest-rate policy on Tuesday and Wednesday. An announcement, due on Wednesday, is expected to include a quarter-point cut in rates and could mark the end of a cycle of six previous rate cuts since mid-September.
Volume on the New York Stock Exchange totaled 1.21 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.78 billion shares traded, below last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by a ratio of about 4 to 3 on the NYSE and by 6 to 5 on Nasdaq. (Editing by Jan Paschal)
