NEW YORK - Blue chip stocks rose Monday as news of a potential big telecom deal involving Verizon pushed the Dow Jones industrials to a new record close, and put the index closer to 14,000. Overall, stocks traded were mixed as investors digested the market's huge gains of last week.
While broader market indexes showed slight declines, the notion of a Verizon deal appeared to inject Wall Street with fresh optimism and helped stocks mostly hold last week's sizable gains because buyout activity has been a big driver for the stock market in the past year.
Although Vodafone Group PLC denied a report by the Financial Times that it is weighing whether to make a huge $160 billion bid for Verizon Communications Inc., investors appeared undeterred. The report cautioned that Vodafone has yet to approach Verizon; a deal could give Vodafone full ownership of Verizon Wireless, which Vodafone and Verizon now own jointly.
"I think just the idea of the number floated - $160 billion - gets the juices running in the market again even after this big move," said Greg Church, chief investment officer of Church Capital Management in Yardley, Pa., referring to last week's gains. "It would be the biggest deal ever. People want to be at the party and they don't miss it."
According to preliminary calculations, the Dow rose 43.73, or 0.31 percent, to 13,950.98 - its 30th record close since the start of the year. The benchmark index, which came off of highs from earlier in the session, again set a trading high, hitting 13,989.11, less than 11 points from 14,000. The previous high of 13,932.29 came in Friday's session, which also saw a record close.
Also helping the Dow, construction equipment maker Caterpillar Inc. hit a new high of $86.49, and closed at $85.90. United Technologies Inc., also a Dow component, hit a 52-week high of $76.98 before it closed at $76.67.
Broader stock indicators slipped lower Monday. The Standard & Poor's 500 index slipped 2.98, or 0.19 percent, to 1,549.52. The S&P set a fresh trading high of 1,555.90, topping a high of 1,555.10 set Friday when the index surged past a trading high set in March 2000.
The Nasdaq composite index fell 9.67, or 0.36 percent, to 2,697.33.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.37 billion shares.
Bonds rose Monday, with the yield on the benchmark 10-year Treasury note falling to 5.04 percent from 5.10 percent late Friday.
On Monday, light, sweet crude futures rose 22 cents to $74.15 on the New York Mercantile Exchange. Oil hadn't closed above that level since mid-August.
The dollar was mixed against other major currencies and continued to hover near its record lows against the euro. Gold prices fell.
Buyout news was responsible for moving a number of stocks Monday. Verizon rose $1.00, or 2.4 percent, to $42.76. Vodafone fell 37 cents to $33.15.
In a much more modest but confirmed deal, restaurant chain operator IHOP Corp. said it would acquire Applebee's International Inc. for about $1.9 billion. Applebee's rose 53 cents, or 2.2 percent, to $24.91, while IHOP jumped $4.99, or 8.9 percent, to $61.24.
Con-way Inc. jumped $3.00, or 5.7 percent, to $56.06 after the trucking company agreed to acquire privately held carrier Contract Freighters Inc. for $750 million.
Church contends the stock market's gains are on solid footing, he contends that if the number of deals slow markedly or if one unravels because of an inability to obtain financing, the overall stock market would likely pull back.
"As you keep racheting this up on more and more speculation at some point it does get a little frothy but we're not there yet," he said, referring to the stock market's gains.
"I think when this might pop is where one of these big deals can't get financing. Then the game is done."
But stocks generally held their ground Monday and showed little reaction to the New York Federal Reserve's Empire State Manufacturing Survey that found regional manufacturing activity continued to improve in July.
Last week's run-up came ahead of a flurry of quarterly results - 11 of the 30 companies that make up the Dow Jones industrials are due to report this week - and in advance of key readings on inflation.
Forecasts from companies should help indicate whether they can continue to put up solid profit growth as pricing pressures fluctuate, in part because of forces such as rising oil prices.
In other corporate news Monday, McDonald's Corp. rose 19 cents to $52.10 after predicting its second-quarter earnings before charges will top Wall Street's forecasts.
Mattel Inc. rose 67 cents, or 2.5 percent, to $27.20 after reporting its second-quarter earnings rose 15 percent as increased sales global of its Barbie dolls and Hot Wheels toy cars made up for soft U.S. sales.
Ford Motor Co. fell 11 cents to $8.87 after denying various reports that it is in talks to sell its Volvo division.
In overseas trading, Britain's FTSE 100 fell 0.28 percent, Germany's DAX index rose 0.16 percent, and France's CAC-40 gained 0.12 percent. Japan's Nikkei stock average finished flat. Hong Kong's Hang Seng Index fell 0.63 percent, while the often-volatile Shanghai Composite Index fell 2.36 percent.
The Russell 2000 index of smaller companies fell 7.30, or 0.85 percent, to 848.47.