* Suntory Holdings to acquire Beam for $83.50 per share
* Lululemon, Sodastream, Express fall after outlooks
* Merck climbs after prelim FDA review, strategic options
* Indexes flat
By Chuck Mikolajczak
NEW YORK, Jan 13 U.S. stocks were flat in early
trading Monday as gains in drugmaker Merck were offset by
investor concern over valuations.
Investor concern may be increasing as stocks have become
expensive, with the S&P above the mean forward price-to-earnings
ratio and at its highest level in nearly seven years. The
benchmark S&P 500 surged almost 30 percent in 2013.
According to Thomson Reuters data, fourth-quarter earnings
are expected to grow 7.3 percent over the year-ago period.
However, the 9.8 ratio of negative guidance to positive outlooks
is currently the largest on record.
"It may be that people are speculating that is it is not
going to be a very good season at this point," said Peter
Jankovskis, co-chief investment officer at OakBrook Investments
LLC in Lisle, Illinois.
"The last three earnings seasons, people have been
questioning how much more earnings improvement can we get
without revenue improvement, and it may be that is finally
catching up with companies."
Gains in Merck, up 2.9 percent to $51.33, the biggest boost
to both the Dow and S&P 500, helped limit declines. A
preliminary review by the U.S. Food and Drug Administration said
the company's experimental blood clot-preventing drug vorapaxar
should be approved. In addition, the drugmaker said it is
pursuing strategic options for its animal health and consumer
businesses and expects to complete any action it takes this
Earnings are expected from 29 companies in the S&P 500 this
week, including banks such as Morgan Stanley, Citigroup
Inc, Goldman Sachs and JPMorgan Chase & Co.
Results are also due from First Horizon National Corp
, M&T Bank Corp, People's United Financial Inc
and Charles Schwab Corp.
The Dow Jones industrial average rose 3.54 points or
0.02 percent, to 16,440.59, the S&P 500 lost 0.01 points
or -0 percent, to 1,842.36 and the Nasdaq Composite
added 1.591 points or 0.04 percent, to 4,176.255.
Equities have started 2014 on a lackluster note, dipping 0.3
percent through the first seven trading sessions as market
participants try to gauge the pace of the winding down of
market-friendly economic stimulus by the Federal Reserve.
Beam Inc jumped 24.2 percent to $83.16 after the
company agreed to be acquired by Suntory Holdings Limited for
$16 billion, including debt, making the Japanese company the
world's third-largest maker of distilled drinks.
A string of companies tumbled after forecasting earnings.
Lululemon Athletica Inc fell 16 percent to $50.07
after the yogawear retailer cut its forecast for the
fourth-quarter due to weak sales in January.
Sodastream International slumped 21.2 percent to
$39.30 after the home beverage system maker after its 2013
outlook. Apparel retailer Express Inc
lost 3.2 percent to $18.41 after it lowered its fourth-quarter
But Wendy's outlook was a bright spot, sending
shares up 8.3 percent to $9.14 after the fast-food restaurant
chain estimated adjusted quarterly earnings above analysts'
expectations, as expenses fell due to franchising many
British engineering firm Amec said it had
provisionally agreed to buy Foster Wheeler in a cash
and share deal that values the Swiss-based engineer at 1.9
billion pounds ($3.13 billion). Foster Wheeler shares added 1.3
percent to $31.86.