* Apple reportedly close to deal for Beats Electronics
* Omnicom Group, Publicis call off merger
* Rocket Fuel plunges after outlook
* Indexes off: Dow 0.26 pct, S&P 0.45 pct, Nasdaq 0.59 pct
(Adds comments, updates to late morning trading)
By Chuck Mikolajczak
NEW YORK, May 9 U.S. stocks dipped on Friday,
putting the S&P 500 on track to close a week of choppy trading
on a negative note, while the Nasdaq was on pace for its worst
weekly decline in four.
Apple Inc was the biggest drag on both the
benchmark S&P index and the Nasdaq 100 on news it is
close to paying a record $3.2 billion for Beats Electronics, two
people with knowledge of the matter said, an expensive foray
into music streaming and headphone gear.
Some analysts questioned whether Beats, valued at $1 billion
during its last funding round in September, was worth that
price. Apple shares lost 1.2 percent to $581.
"What we look for in really good companies is people that
understand the cash they have is the shareholders' and they use
it accordingly," said Kim Forrest, senior equity research
analyst, Fort Pitt Capital Group in Pittsburgh.
"I don't care about the $3 billion leaving Apple; what I
care about is the valuation they are putting on this little
company, that is what is troubling."
The S&P 500 has alternated between gains and losses
each day this week, and the Nasdaq has dropped for three
straight sessions - its longest losing streak since early April
- as Internet-related stocks came under pressure. The Nasdaq is
on pace for its first four-day losing streak since mid-March.
Both the Dow and S&P 500 have struggled to break through
recent highs, with market participants citing weakness in growth
names on the Nasdaq issues and among smaller capitalized issues
as a headwind. The Russell 2000 of small-cap companies
touched correction territory with a 10 percent drop since its
March 9 high before bouncing slightly. A drop of that magnitude
on a closing basis could spark more investor caution.
"It's the job of investors to participate in the market and
reflect what is going on, and if they think these things are
overpriced, there is information in this. We are trying to
figure out what it really means - is it a temporary lull, some
pricing issues - but there is something confusing going on
here," said Forrest.
The Dow Jones industrial average fell 42.25 points,
or 0.26 percent, to 16,508.72, the S&P 500 lost 8.41
points, or 0.45 percent, to 1,867.22 and the Nasdaq Composite
dropped 24.094 points, or 0.59 percent, to 4,027.402.
A proposed $35 billion merger of U.S.-based Omnicom Group
Inc and rival France's Publicis Groupe SA to
create the world's biggest ad agency has been called off due to
complex obstacles. Omnicom shares lost 0.6 percent to $65.78.
Gap Inc reported a 9 percent increase in comparable
sales for April and the apparel company gave a profit forecast
that surpassed Wall Street expectations. Shares were up 4
percent at $40.80.
Rocket Fuel Inc, tumbled 26.6 percent to $20.42
after the technology provider for Web-based video advertising
forecast current-quarter revenue far below expectations,
prompting downgrades from Goldman Sachs and BMO Capital.
Ralph Lauren Corp lost 3.8 percent to $146.26 after
the luxury clothing house said it expected global revenues to
rise between 6 percent and 8 percent in fiscal 2015 but warned
its operating margin would decline.
Of 451 companies in the S&P 500 that have reported earnings
through Friday morning, 69 percent beat expectations, above the
63 percent average since 1994 and the 66 percent beat rate for
the past four quarters, according to Thomson Reuters data.
Profits are expected to rise 5.4 percent this quarter, down
from 6.5 percent estimated at the start of the year, but above
the low of 0.6 percent in mid-April.
(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and