Verizon's $6. 7 billion bid for MCI met with indifference yesterday on Wall Street, where stocks barely budged in light trading. The Dow Jones industrial...
NEW YORK — Verizon’s $6.7 billion bid for MCI met with indifference yesterday on Wall Street, where stocks barely budged in light trading.
The Dow Jones industrial average fell 4.88 to 10,791.13. Microsoft, one of the 30 Dow stocks, added 4 cents to close at $26.01 a share. Boeing, also a Dow stock, slipped 1 cent to $54.04.
Broader stock indicators closed a bit higher. The Standard & Poor’s 500 index was up 0.84 at 1,206.14, and the Nasdaq composite index gained 6.25 to 2,082.91.
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Mergers generally provide the markets with a boost, but with the telecom sector facing stiffer competition, investors saw the Verizon-MCI deal only as a necessary step in dealing with those competitive pressures. Most investors kept to the sidelines while the sector’s consolidation sorts itself out.
With no premium on MCI’s shares — they were valued in the Verizon deal at $20.75 — the usual buying that goes along with such an announcement was conspicuously absent. MCI shed 82 cents to $19.93, while Verizon slipped 12 cents to $36.19.
Qwest Communications International, which was also interested in MCI, lost 17 cents to $3.98.
“I think the merger really was built in to both MCI and Verizon’s stock prices already,” said Neil Massa, equity trader at John Hancock Funds in Boston.
“Investors are looking forward now to later in the week, when you have retail sales reports coming out and [Federal Reserve Chairman Alan] Greenspan before Congress.”
A rise in oil prices also kept investors out of the market. A barrel of light crude was quoted at $47.44, up 28 cents, on the New York Mercantile Exchange.
“It’s the kind of day where you catch your breath, digest the move up we’ve had over the last couple weeks,” said Jay Suskind, head trader for Ryan Beck. “There aren’t a lot of catalysts out there that can really move the market.”
The government’s retail sales report for January is due today, while Greenspan will be testifying on Capitol Hill about the state of the economy and monetary policy tomorrow and Thursday.
The Fed chairman is not expected to signal any change in the central bank’s policy of measured quarter-percentage point interest-rate increases.
Concern over interest rates and the possibility of inflation were a major cause of January’s downturn, though those worries were assuaged earlier this month as the Fed stuck to its measured pace of rate increases and did not mention a greater inflation risk in its policy statement.