(Recasts first paragraph, adds Dell shares rising late, home builders’ declines and volume figures for NYSE and Nasdaq)
By Ellis Mnyandu
NEW YORK, May 31 (Reuters) - The S&P 500 closed at a record on Thursday as plans for a $6.8 billion takeover in the financial sector and data pointing to strength in industrial activity underpinned demand for equities.
Wachovia Corp.’s WB.N proposed buyout of A.G. Edwards Inc. (AGE.N) sent shares of brokerages higher, while strong Midwest manufacturing data boosted shares of industrials, including United Technologies Corp. (UTX.N) and DuPont DD.N
Investors locking in month-end profits limited the advance and caused the Dow to shed gains toward the close as they sold stocks that have underpinned the market’s steady climb, including shares of energy companies.
“The Chicago PMI numbers, Wachovia’s takeover of A.G. Edwards, is what’s moving things today,” said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco. “M&A continues to give the market a bid.”
The Dow Jones industrial average .DJI slipped 5.44 points, or 0.04 percent, to close at 13,627.64. But the Standard & Poor's 500 Index .SPX gained 0.39 of a point, or 0.03 percent, to end at a record 1,530.62. It was the S&P 500's second straight record finish.
The Nasdaq Composite Index .IXIC gained 11.93 points, or 0.46 percent, to 2,604.52.
During the session, the Dow hit an all-time high of 13,673.07, while the Nasdaq climbed to 2,607.90, its highest level in more than six years.
The month marks the best May for both the Dow and the S&P 500 in four years — no mean feat with May associated with the old Wall Street adage, “Sell in May and go away.”
The Nasdaq achieved its best May performance since 2005.
For the month, the Dow finished up 4.32 percent, the Nasdaq gained 3.14 percent, and the S&P 500 gained 3.25 percent.
Wachovia, the fourth-largest U.S. bank, said it planned to buy brokerage A.G. Edwards for about $6.8 billion in cash and stock to create the second-largest retail brokerage in the United States. For details, see [ID:nN31487154].
Shares of A.G. Edwards jumped 14.3 percent to close at $88.16 on the New York Stock Exchange and ranked as the second-biggest percentage gainer on the Big Board.
The AMEX Securities broker dealer index .XBD rose 2.8 percent. Shares of Raymond James Financial Inc. (RJF.N) rose 7.3 percent to end at $33.31 on the NYSE.
Wachovia shares slipped 0.7 percent to $54.19.
POLISHING THE APPLE - AND DELL, TOO
On the Nasdaq, shares of Apple Inc. (AAPL.O) climbed 2.04 percent for a close at $121.19, extending gains from Wednesday when positive brokerage comments boosted the stock.
After the bell, shares of computer maker Dell Inc. DELL.O rose 6.2 percent to $28.48 in electronic trading from a Nasdaq close of $26.91 after the computer maker posted preliminary quarterly results that topped estimates and said it would cut 10 percent of its workforce.
In the regular session, shares of diversified manufacturer United Technologies gained 1.6 percent to $70.55 on the NYSE. The stock was the Dow’s biggest advancer. DuPont, the Dow’s second-biggest gainer, rose 1.2 percent to $52.32.
Exxon Mobil was the heaviest weight on both the Dow and the S&P 500. Exxon’s stock fell almost 1 percent to end at $83.17 on the NYSE.
Data showing a stronger-than-expected reading in the Chicago purchasing managers’ index, a gauge of Midwest manufacturing activity, lent support, and helped offset news that the U.S. economy grew at its weakest rate in more than four years in the first quarter.
Still, key components of GDP showed continuing resilience that may foster a healthier pace of expansion later in the year.
Home builders’ stocks took a hit on news that first-quarter U.S. home price appreciation registered its slowest pace in a decade, according to data from the Office of Federal Housing Enterprise Oversight, a federal regulatory agency. [ID:nN31194889]
Shares of luxury home builder Toll Brothers (TOL.N) ended down 1.7 percent at $29.33 on the NYSE. The Dow Jones Home Construction Index .DJUSHB ended down 0.9 percent.
Another luxury builder, Hovnanian Enterprises Inc. (HOV.N) reported a quarterly loss, compared with a year-ago profit, and withdrew its previous forecast in results released after the closing bell. During the regular session, Hovnanian’s stock fell 2.7 percent to close at $25.26 on the NYSE. In after-hours electronic trading, though, the stock inched up to $25.40.
But the transport sector was among Thursday’s winners, with shares of package delivery company FedEx Corp. (FDX.N) rising 2.6 percent to $111.62. The Dow Jones Transportation Average .DJT, an index of airline, shipping and trucking stocks that includes FedEx, also ended at a record. The DJ Transportation Average rose 1.13 percent to finish at 5,292.82.
Trading was heavy on the NYSE, with about 1.86 billion shares changing hands, above last year’s estimated daily average of 1.84 billion. On the Nasdaq, about 2.46 billion shares traded, above last year’s daily average of 2.02 billion.
Advancing stocks outnumbered declining ones by a ratio of about 7 to 5 on both the NYSE and the Nasdaq.