Closing Bell: Despite Mergers, Stocks Decline Ahead of Fed Meeting

Despite mergers, stocks decline ahead of Fed meeting
Richard Drew/APSpecialist Edward Zelles, left, works at the post that handles Elan Corp. on the floor of the New York Stock Exchange on Monday. U.S. drugmaker Perrigo agreed Monday to buy Ireland's Elan for $8.6 billion in a deal that should allow the rapidly growing company to reduce its tax bill and boost its royalty stream.

A big week for economic news began on Monday, and stocks fell ahead of a Federal Reserve meeting and what's expected to be unexciting data on growth and jobs.

The Dow Jones industrial average (^DJI) lost 35.79 points, or 0.23 percent, to close at 15,523.04. The Standard & Poor's 500 index (^GSPC) was down 6.21 points, or 0.37 percent, to 1,685.44. The Nasdaq composite (^IXIC) declined 14.02 points, or 0.39 percent, to 3,599.14.

In the day's major data release, the National Association of Realtors said that its seasonally adjusted index for pending home sales slipped 0.4 percent to 110.9 in June. That's down from a 6.5 year high in the previous month -- May's revised reading was lower by a percentage point (111.3), but remained the highest since December 2006. The new number was well-received by economists, who considered it a slight decline in the face of higher mortgage rates.

The first estimate of second quarter economic growth is released on Wednesday, and is expected to come in low, at around 0.5 percent. Also on Wednesday, the Fed will speak to investors after concluding a two-day meeting about the future of monetary policy.

There were three big-ticket mergers today:

  • Luxury retailer Saks (SKS) jumped 64 cents, or 4.18 percent, to $15.95 after announcing a $2.4 billion deal to be acquired by Hudson's Bay, the Canadian owner of Lord & Taylor.

  • Omnicom lost 36 cents, or 0.55 percent, after agreeing to merge with France's Publicis Groupe to form the biggest advertising company in the world. Shares of Omnicom jumped on the news before retreating, and the stock ended regular trading at $64.75. Rival advertising company Interpublic Group (IPG) gained 74 cents, or 4.66 percent, to end at $16.61.

  • And Perrigo (PRGO) fell $9.06, or 6.75 percent, to $125.17 after the drugmaker agreed to buy Irish biotech firm Elan for $8.6 billion. The decision reportedly had more to do with favorable tax rates in Ireland than with any of Elan's discoveries.

More stocks in the news:

  • Caterpillar (CAT) rose 1.17 percent after announcing a $1 billion accelerated stock repurchase program. Shares ended the day at $83.02, up 96 cents.

  • Caesars Entertainment (CZR) posted a smaller loss for its fiscal first quarter, but results were still short of expectations as the company's casinos drew fewer gamblers. Its net loss was $212.2 million, or $1.69 per share, down from $241/7 million, or $1.93 a share, last year. Shares were up 10 cents, or 0.65 percent, to $15.58 at closing.

  • CF Industries (CF) soared $21.30, or 12 percent, to $202.30 after reports that activist investor Daniel Loeb's hedge fund, Third Point, had invested in the company.

What to watch Tuesday

  • The S&P Case-Shiller index of home prices in 20 U.S. cities is out at 9 a.m. Eastern time.

  • The Conference Board releases its consumer confidence index at 10 a.m.

There are lots of corporate earnings tomorrow. Companies scheduled to report include:

(before market open)

  • 3D Systems Corp (DDD)

  • Aetna (AET)

  • Barclays PLC (BCS)

  • Coach (COH)

  • Deutsche Bank AG (DB)

  • The Goodyear Tire & Rubber Company (GT)

  • JetBlue Airways (JBLU)

  • Martha Stewart Living Omnimedia (MSO)

  • Merk (MRK)

  • Nielsen Holdings (NLSN)

  • NYSE Euronext (NYX)

  • Occidental Petroleum (OXY)

  • Office Depot (ODP)

  • Oshkosh (OSK)

  • Pfizer (PFE)

  • Sprint Nextel (S)

  • United States Steel (X)

  • Waste Management (WM)

  • Western Union (WU)

(after market close)

  • Aflac (AFL)

  • Amgen (AMGN)

  • Buffalo Wild WIngs (BWLD)

  • Cloud Peak Energy (CLD)

  • Dynamic Materials (BOOM)

  • NuVasive (NUVA)

  • Grand Canyon Education (LOPE)

–Compiled from staff and wire reports