- The Washington Times - Tuesday, May 22, 2007

NEW YORK (AP) — Wall Street ended an erratic session little changed as investors upbeat about the latest round of takeover activity remained hesitant to take the market higher ahead of new economic data.

While stocks moved sideways, Treasury yields rose to a three-month high.

Investors have viewed acquisitions as a sign corporate executives are comfortable with the economy. However, stocks failed to gain much momentum as several deals were announced yesterday, including billionaire investor Kirk Kerkorian’s plans to buy the Bellagio Hotel & Casino in Las Vegas from MGM Mirage Inc.

“There’s no real drivers out there, and what we’re waiting for is some more economic data,” said Todd Salamone of Schaeffer’s Investment Research. “We’re right around the closing highs of 2000, so there is some hesitancy at those levels for the time being. It is a short term bump in the midst of an ongoing uptrend.”

On a day bereft of major economic reports, Wall Street was watching talks between U.S. and Chinese government officials about trade and foreign exchange policy. Chinese stocks rose to a fresh record high for the second day in a row, as investors there were encouraged by expectations for a stronger yuan and robust housing demand.

The Dow Jones Industrial Average fell 2.93, or 0.02 percent, to 13,539.95. The Standard & Poor’s 500 slipped 0.98, or 0.06 percent, to 1,524.12. The index, considered by market professionals as the best indicator of overall market performance, passed its record close of 1,527.46 on Monday and again yesterday for the first time since 2000. However, the S&P; remains well below its trading high of 1,552.87, reached in March 2000.

The Nasdaq Composite Index, which has trailed the other major indexes in recovering from Wall Street’s prolonged slump early in the decade, rose 9.23, or 0.36 percent, to 2,588.02.

The Russell 2000 Index of smaller companies posted a record close after rising 6.27, or 0.75 percent, to 839.92. The previous record was set May 9. The large-cap Russell 1000 Index and broader Russell 3000 Indexes also had record closes for the second straight day.

Bonds slipped, with the yield on the benchmark 10-year Treasury note rising to 4.82 percent from 4.79 percent late Monday, in part because of a flood of corporate bonds in the market. The dollar was mixed against other major currencies, while gold prices fell.

Stock markets in other countries have also been gaining, particularly in China. The Shanghai Composite Index gained 0.9 percent to 4,110.38, moving above 4,100 for the first time. The Shenzhen Composite Index climbed 1.4 percent to 1,198.41, also a record high.

The spike in the sometimes volatile Chinese stock markets coincided with high-level talks between the United States and China aimed at lessening economic tensions. Leaders began meeting on Monday for two days of talks to ease conflicts in bilateral trade and an undervalued yuan.

Oil prices backed off their recent run, with a barrel of light, sweet crude falling $1.30 to $64.97 on the New York Mercantile Exchange. Prices have been driven higher in part by ongoing concerns that U.S. refiners are not producing enough gasoline to meet peak summer demand.

MGM Mirage surged $17.03, or 27 percent, to $79.98. Mr. Kerkorian said he expects to pursue “financial restructuring transactions” for the casino. His investment vehicle, Tracinda Corp., owns a 56 percent stake in MGM Mirage.

Chevron Corp. said it will sell its 12 percent stake in power producer Dynegy Inc. The move is part of Chevron’s push to shed unnecessary operations, and sent its shares down 65 cents to $82.18. Dynegy fell 34 cents, or 3.3 percent, to $9.83.

Fremont General Corp. agreed to sell its commercial real estate lending business, and some of its loan portfolio, for $1.9 billion to IStar Financial Inc. The company has been dismantling its business because of troubles in the subprime mortgage sector. Fremont rose $2.89, or 41 percent, to $10.

Acquisitions have been a primary catalysts behind the stock market’s advance, and this week alone totaled some $93.5 billion in announced global offers, according to financial data provider Dealogic. So far this year, about $2.3 trillion worth of takeovers have been announced — putting the tally on pace to beat last year’s record $4 trillion.

“The merger-and-acquisition activity is phenomenal. Every day you get something. Until that disappears, it’s going to be hard for the market to go lower,” said Matt Kelmon of the Kelmoore Strategy Funds.

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