updated 2/15/2005 8:10:55 AM ET 2005-02-15T13:10:55

Verizon Communications’ $6.7 billion bid for MCI Inc. met with indifference Monday on Wall Street, where stocks barely budged in very light trading.

Major Market Indices

Mergers generally provide the markets with a boost, but with the telecom sector facing stiffer competition, investors saw the Verizon-MCI deal only as a necessary step in dealing with those competitive pressures. Most investors kept to the sidelines while the sector’s consolidation sorts itself out.

A rise in oil prices also kept investors out of the market. A barrel of light crude was quoted at $47.44, up 28 cents, on the New York Mercantile Exchange.

“It’s the kind of day where you catch your breath, digest the move up we’ve had over the last couple weeks,” said Jay Suskind, head trader for Ryan Beck & Co. “There aren’t a lot of catalysts out there that can really move the market.”

According to preliminary calculations, the Dow Jones industrial average fell 4.88, or 0.05 percent, to 10,791.13.

Broader stock indicators closed narrowly higher. The Standard & Poor’s 500 index was up 0.84, or 0.1 percent, at 1,206.14, and the Nasdaq composite index gained 6.25, or 0.3 percent, to 2,082.91


With no premium on MCI’s shares — they were valued in the Verizon deal at $20.75 — the usual buying that goes along with such an announcement was conspicuously absent. MCI shed 82 cents to $19.93, while Verizon slipped 12 cents to $36.19. Qwest Communications International Inc., which was also interested in MCI, lost 17 cents to $3.98.

While the implications for the embattled telecom sector will likely be profound, Wall Street’s lack of enthusiasm was due to the fact that the merger talks had been in the news for some time, and that investors’ attention has been focused on the economy rather than individual sectors.

“I think the merger really was built in to both MCI and Verizon’s stock prices already,” said Neil Massa, equity trader at John Hancock Funds in Boston. “Investors are looking forward now to later in the week, when you have retail sales reports coming out and (Federal Reserve Chairman Alan) Greenspan before Congress.”

The government’s retail sales report for January is due Tuesday, while Greenspan will be testifying on Capital Hill about the state of the economy and monetary policy on Wednesday and Thursday. The Fed chairman is not expected to signal any change in the central bank’s policy of measured quarter-percentage point interest rate hikes.

Concern over interest rates and the possibility of inflation were a major cause of January’s downturn, though those worries were assuaged earlier this month as the Fed stuck to its measured pace of rate hikes and did not mention a greater inflation risk in its policy statement.

In other news Monday, American International Group Inc. pulled the Dow lower, losing $2.03 to $71.09, after saying it has received new subpoenas from the Securities and Exchange Commission and New York Attorney General Eliot Spitzer regarding various products and transactions.

General Motors Corp. announced it would pay Italy’s Fiat SpA $2 billion to get out of a deal to eventually purchase the company’s struggling auto manufacturing unit. GM added 10 cents to $37.24.

OfficeMax Inc. tumbled $1.73 to $30.02 after the company’s president and chief executive stepped down. The company also fired six employees over accounting irregularities. OfficeMax did not say whether the resignation of CEO Christopher C. Milliken was related to the company’s ongoing internal investigation.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came was light.

The Russell 2000 index of smaller companies was up 0.26, or 0.04 percent, at 635.02.

Overseas, Japan’s Nikkei stock average rose 0.68 percent. In Europe, Britain’s FTSE 100 closed down 0.05 percent, France’s CAC-40 lost 0.12 percent for the session, and Germany’s DAX index dropped 0.03 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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