Takeover deals help stocks

Wall Street managed a moderate advance Monday as a spate of takeover deals gave investors enough confidence to buy into the market despite a report showing that U.S. manufacturing was more sluggish than expected.

Buyers drew support from big acquisitions announced before trading began, including deals to take credit card transaction processor First Data and media conglomerate Tribune private. But gains were limited by the Institute for Supply Management’s manufacturing index, which slipped more than economists projected in March. The index moved to a reading of 50.9 last month, compared with an expected reading of 51.0.

Also, putting pressure on technology stocks, the Semiconductor Industry Assn. said total chip sales in February fell to $20.1 billion from $21.5 billion in January because of seasonal weakness, lower manufacturing capacity and price cuts.

Wall Street has traded nervously the last few weeks on concerns about rising inflation and the overall health of the economy. On Friday, the major indexes finished the first quarter lower -- with the Dow Jones industrials down 108 points in their feeblest performance since the second quarter of 2005.

St. Louis Federal Reserve President William Poole said in a speech to bankers in New York that inflation was still a “major concern.” He said that inflation levels could require more rate hikes and a U.S. recession remained conceivable. But Poole, whose comments have moved stocks in the past, had little lasting effect Monday.

“If you’re listening to the Fed, this is just more of the same. I think the focus is going to turn from little bits of data on inflation to earnings very quickly,” said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. “The Fed just doesn’t want everyone to get excited about a rate cut, and we’ll see an even bias out of them for the next few months.”

The Dow rose 27.95 points, or 0.23%, to 12,382.30. The benchmark index is now 404 points below its record close reached Feb. 20.

Broader stock indicators also rose slightly. The Standard & Poor’s 500 index gained 3.69 points, or 0.26%, to 1,424.55, and the Nasdaq composite index edged up 0.62 of a point, or 0.03%, to 2,422.26.

The Russell 2,000 index of smaller companies gained 2.51 points, or 0.31%, to 803.22.

Bond yields were little changed. The benchmark 10-year Treasury note rose to 4.64%, from 4.63% on Friday. The dollar was mixed against other major currencies, while gold prices rose.

Oil prices advanced slightly as investors speculated about how tensions between Iran and Britain could interrupt supply from the Middle East. Crude oil futures rose 7 cents a barrel to $65.94 on the New York Mercantile Exchange.

Arthur Hogan, chief market analyst at Jefferies & Co., said oil had been one concern weighing on markets. He believes the market will continue to look for some kind of economic direction while reacting to corporate news.

“That’s the battle we’re going to have. Are we starting the quarter with good company news or will we continue to be concerned about an economic slowdown?” he said. “That’s the argument.”

In other market highlights:

* First Data spiked $5.55, or 21%, to $32.45 after Kohlberg Kravis Roberts agreed to take it private in a $29-billion deal. This is one of the largest private equity transactions of the year, coming in second only to KKR’s deal to buy energy company TXU for $31.8 billion.

* Also going private is Tribune, which accepted a buyout offer from real estate investor Sam Zell in a deal valued at about $8.2 billion. Shares of the media company that owns the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune and other properties rose 70 cents, or 2.2%, to $32.81.

* Web search leader Google rose 37 cents to $458.53. Google is said to be interested in buying advertising placement firm DoubleClick in a deal worth about $2 billion, according to the Wall Street Journal. Microsoft, which was also reported to be interested in buying the company, fell 13 cents to $27.74.

* Kraft Foods fell 81 cents, or 2.6%, to $30.96 after it was spun off from former parent Altria Group. The maker of Marlboro cigarettes rose $2.32, or 3.5%, to $68.22.

* Starwood Hotels & Resorts Worldwide rose $2.97, or 4.6%, to $67.82, after announcing Steven J. Heyer had resigned as chief executive and a director after the company’s board lost confidence in his leadership. The company also reaffirmed its first-quarter and full-year guidance.

* Home lenders were weak after New Century Financial filed for Chapter 11 bankruptcy, and M&T; Bank said it expected first-quarter profit to be hurt by its mortgage business. New Century fell 15 cents to 92 cents, in over-the-counter trading. M&T; shares fell $9.88, or 8.5%, to $105.95. Countrywide Financial of Calabasas fell 91 cents, or 2.7%, to $32.73.

* Apple shares rose 74 cents to $93.65 after it reached an agreement with EMI Group to sell the record label’s songs online without copy protection software. However, the deal did not include the Beatles catalog.