Stocks mixed despite bin Laden's death

Stocks lost some of their early gains and turned mixed yesterday despite the death of Osama bin Laden, several strong earnings reports and a major drug industry acquisition.

The Dow Jones industrial average rose 27 points, or 0.2 per cent, to 12,839 in early afternoon trading. It had been up as many as 65 points earlier in the day.

President Barack Obama said late Sunday that bin Laden, the al-Qaida chief who masterminded the September 11, 2001 attacks, had been killed by American forces in Pakistan. That helped to raise investors' confidence when the market opened.

"It's a feel-good item," said Howard Silverblatt, senior index analyst at Standard & Poor's. "It gives closure to a lot people."

But Silverblatt, like many analysts, cautioned that the news would likely result in only a short-term gain for the market. Most traders were instead focused on earnings and economic news.

strong earnings

So far, strong earnings results over the last two weeks helped the Standard & Poor's 500 reach its highest levels since the financial crisis, closing at 1,363.61 on Friday.

Dish Network Corp, Chrysler Group LLC and Humana Inc all reported strong earnings.

Dish Network's first-quarter net income more than doubled, in part, because of a patent settlement with TiVo Inc. Its stock rose 16 per cent.

Humana's profit rose 22 per cent. The company benefited from more people enrolling in its Medicare plans. Its stock was flat.

Chrysler reported its first profit since leaving bankruptcy two years ago thanks to growing sales.

Whole Foods Market Inc fell four per cent, though, after a Jefferies analyst downgraded the company and said sales could stagnate as shoppers feel the pinch of higher gas prices.

In corporate news, Israeli drug maker Teva Pharmaceutical Industries Limited said it would buy Cephalon Inc for US$81.50 per share, or US$6.8 billion.

Cephalon's key drugs include the sleep disorder treatment Provigil and the cancer drug Treanda. Cephalon's shares rose four per cent.

The S&P 500 index rose a point, or 0.1 per cent, to 1,365. It had been up seven points earlier. The Nasdaq composite index fell two points, or 0.1 per cent, to 2,871.

Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.28 per cent from 3.29 per cent late Friday. The dollar fell 0.2 per cent against an index of six other heavily traded currencies.

The Institute of Supply Management reported that manufacturing activity increased for the 21st month in April, though at a slightly slower pace than the month before. This was expected by economists.

The US Commerce Department also reported that builders started work on more projects in March after three straight monthly declines in construction spending.

- AP