Dow, S&P notch new records; Nasdaq drops
Trader David Williams, right, works on the floor of the New York Stock Exchange on Tuesday, May 13, 2014. The Standard & Poor’s 500 index crossed above 1,900 for the first time Tuesday as investors assessed news on retail sales. AP
NEW YORK—The Dow and S&P 500 Tuesday edged to record closing highs for the second day in a row even as the Nasdaq fell on concerns technology stocks were overvalued.
The Dow Jones Industrial Average advanced 19.97 points (0.12 percent) to 16,715.44, while the S&P 500 added 0.80 (0.04 percent) at 1,897.45 after breaching 1,900 for the first time.
But the Nasdaq Composite Index dropped 13.69 (0.33 percent) to 4,130.17.
The Nasdaq has underperformed the other two indices since early March on worries that tech-sector earnings will not live up to lofty expectations.
Jack Ablin, chief investment officer at BMO Private Bank, said a report showing US retail sales rose by just 0.1 percent in April was “modestly disappointing given that many investors are expecting an economic acceleration in the US.”
Ablin said the tumble on the Nasdaq was a result of “expensive” valuations for Nasdaq and small-cap stocks.
“Investors get squeamish when expectations are this high,” he said.
Valeant moved ahead with its effort to acquire Botox maker Allergan despite being rebuffed. Valeant chief executive J. Michael Pearson said the Canadian company would “improve our offer” for Allergan based on shareholder feedback to a May 28 conference call.
Allergan rose 1.0 percent, while Valeant dipped 0.4 percent.
Pfizer’s chief executive faced tough questioning by a British parliamentary panel over potential job cuts due to its proposed acquisition of British pharmaceutical company AstraZeneca. But the chief of AstraZeneca, which has refused to enter merger discussions, would not rule out a deal if terms were changed. Pfizer rose 0.2 percent.
Dow member AT&T is close to a deal to acquire satellite-television provider DirecTV for around $50 billion, US media reported. AT&T fell 1.0 percent, while DirecTV declined 1.2 percent.
Keurig Green Mountain got a lift after Coca-Cola increased its stake in the coffee company from 10 to 16 percent. The two companies are collaborating on a device to make cold drinks at home. Keurig Green Mountain rose 7.6 percent, while Coca-Cola gained 0.7 percent.
Bond prices rose. The yield on the 10-year US Treasury fell to 2.62 percent from 2.66 percent, while the 30-year declined to 3.45 percent from 3.49 percent. Bond prices and yields move inversely.
