BofA leads banks up; S&P 500 index ekes out gain
- Article by: MATTHEW CRAFT
- Associated Press
- May 6, 2013 - 8:00 PM
NEW YORK – Bank of America led a rally in big-bank stocks in mostly quiet trading on Monday. Stock indexes ended little changed following a record-setting run last week.
News that Bank of America and MBIA, a bond-insurance company, had reached a settlement over a long-running dispute propelled both companies’ stocks up. BofA will pay $1.7 billion to MBIA and extend the troubled company a credit line.
MBIA soared 45 percent, or $4.46, to $14.29. Bank of America gained 5 percent, or 64 cents, to $12.88, making it the leading company in the Dow Jones industrial average.
The Dow slipped 5.07 points to close at 14,968.89. The Standard & Poor’s 500 index crept up 3.08 points to 1,617.50, a gain of 0.2 percent.
Six of the 10 industry groups in the S&P 500 rose, with financial companies in the lead.
No major economic reports came out Monday, but a handful of companies reported their quarterly results. Tyson Foods, the nation’s largest meat-processing company, fell 3 percent, the biggest drop in the Standard & Poor’s 500 index, after saying its net income sank as costs for chicken feed rose. Tyson’s stock lost 83 cents to $24.10.
Companies have reported solid quarterly profits so far this earnings season. Seven of every 10 big companies in the S&P 500 have beat the earnings estimates of financial analysts, according to S&P Capital IQ. But revenue has looked weak: six of 10 have missed revenue forecasts.
“Yet again, corporations continue to do more with less,” said Dan Veru, the chief investment officer of Palisade Capital Management.
Veru said the trend is likely to lead to more mergers in the coming months, as cash-rich companies look for ways to raise their revenue. A wave of mergers could shift the stock market’s rally into a higher gear, he said.
In Monday trading, the Nasdaq composite rose 14.34 points to 3,392.97, an increase of 0.4 percent. The price of crude oil edged up 55 cents to $96.16 and gold rose $3.80 to $1,468.10 an ounce.
© 2013 Star Tribune