Markets dip; longest rally in 3 weeks ends
New York — Stocks fell Monday, halting the longest rally in three weeks, after funding for Dow Chemical Co.’s purchase of Rohm & Haas Co. fell through, raising concern companies won’t complete deals as financing disappears.
Dow Chemical declined 19 percent following Kuwait’s decision to scrap a deal that would have provided $9 billion in cash to pay for Rohm & Haas, which dropped 16 percent. SL Green Realty Corp. retreated 10 percent after New York’s biggest office landlord cut its quarterly dividend by more than half. Chevron Corp. advanced after oil gained 6.1 percent to $40.02 a barrel as Israeli airstrikes in the Gaza Strip raised concern that crude supplies may be disrupted.
"The potential financing problems for Dow Chemical are causing people some concern," said John Carey, who runs the $4.62 billion Pioneer Fund that’s beaten 73 percent of its peers this year. "That could create some problems for other deals in the works. To the extent that M&A speculation was helping to support share prices, that may not be a support."
The Standard & Poor’s 500 index lost 0.4 percent to 869.42. The Dow Jones industrial average fell 31.62 points, or 0.4 percent, to 8,483.93. The Nasdaq composite index fell 19.92, or 1.3 percent, to 1,510.32.
Dow Chemical, the largest U.S. chemical maker, fell 19 percent to $15.32. Rohm & Haas, the world’s biggest maker of acrylic paint ingredients, lost 16 percent to $53.34. Kuwait backed out of a deal to buy 50 percent of Dow Chemical’s plastics unit, eliminating proceeds earmarked for the takeover quick cash advance. Dow had agreed to buy Rohm & Haas to gain more lucrative specialty chemicals that serve electronics and coatings markets. Dow will probably renegotiate and offer to buy the company for less than $70 a share, Deutsche Bank AG analysts said.
Raw materials producers fell 2.1 percent for the steepest decline among 10 S&P 500 industries. DuPont Co., the third-largest U.S. chemical maker, lost 2 percent to $24.49.
SL Green fell 10 percent to $24.42. Its dividend was slashed by 52 percent to 37.5 cents a share.
Consumer companies reliant on discretionary spending lost 1.2 percent, the third-biggest drop among 10 industries, as sales at retailers shaped up to be the worst in 40 years. Jones Apparel Group Inc. dropped 19 percent to $4.55. Liz Claiborne Inc. slid 13 percent to $2.20.
Micron Technology Inc. retreated 8.9 percent to $2.36. The only remaining U.S. maker of computer-memory chips will have to raise money soon because it depleted cash reserves last quarter, according to Wachovia Corp. analysts.
Chevron, the second-largest U.S. oil producer, added 1.7 percent to $71.55. Occidental Petroleum Corp., the fourth-largest U.S. energy company, increased 4.1 percent to $56.36. Crude rose a second day.
Newmont Mining Corp. increased 4.8 percent to $40.70, driven by gold’s rise to an 11-week high. Freeport-McMoRan Copper & Gold Inc. rose 2.5 percent to $23.14 as copper rallied.
Filed under: economics by Fred