Stocks slip to kick off week; Traders review flurry of new dealmaking

Stocks edge lower as investors take profits

NEW YORK — Stocks took a pause from their big September rally on Monday.

With no major economic reports to drive trading, investors focused instead on individual stocks after a fresh round of corporate dealmaking in the airline, consumer products and retailing industries.

The Dow Jones industrial average fell 25 points in afternoon trading, but is still on pace for its best September since 1939.

Chip Bryan, CEO of SmarTrend, an electronic trend trading system, said Monday’s modest decline was largely tied to investors pocketing profit made during the strong September rally.

“The September rally has been surprisingly resilient,” Bryan said. But investors might be ready to put the brakes on the run-up so they can wait to see what happens during earnings season, which kicks off next week, Bryan said.

The Dow entered Monday having risen each of the past four weeks, its longest winning streak since eight consecutive weekly gains ended in late April when stocks hit their highest levels of the year.

Financial stocks mostly dipped as concern remains about the health of Europe’s banking sector. Moody’s Investors Service cut its rating on Anglo Irish Bank Corp., one of Europe’s more troubled banks in recent months. Global banking giants like Barclays PLC and JPMorgan Chase & Co. fell about 1 percent.

In deal news, consumer products giant Unilever NV agreed to buy beauty products maker Alberto Culver Co. for $3.7 billion. Southwest Airlines Co. will purchase AirTran Holdings Inc. for about $1.4 billion. Wal-Mart Stores Inc. proposed to buy South African consumer goods distributor Massmart Holdings Ltd. for about $4.25 billion.

Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth Fund, said the latest deals are a sign companies are confident economic growth will pick up in the coming quarters. Acquisition activity has been booming this month as companies become more willing to take large cash reserves built up during the recession and invest it.

“The timing is never certain, but smart companies are saying, ‘if not now, when,’” Sansoterra said. “This is the time to be doing it.”

The Dow fell 25.21, or 0.2 percent, to 10,835.20 in afternoon trading. Even with Monday’s modest retreat, the Dow has jumped 8.2 percent in September, which is historically one of the worst months of the year for the market.

The Standard & Poor’s 500 index fell 4.05, or 0.4 percent, to 1,144.62, while the Nasdaq composite index fell 8.46, or 0.4 percent, to 2,372.76.

Shares of Unilever, which makes Dove soaps, Axe deodorants and Suave shampoos, rose 32 cents to $29.69. Alberto Culver, which makes beauty products such as TRESemme, VO5 and Simple, jumped $6.25, or 19.9 percent, to $37.73.

AirTran shares jumped $2.82, or 62 percent, to $7.37. The deal valued Airtran shares at $7.69. Southwest rose $1.49, or 12.1 percent, to $13.77.

Wal-Mart shares fell 39 cents to $53.69.

JPMorgan shares fell 54 cents to $39.21. Barclays dropped 21 cents to $19.60.

About four stocks fell for every three that rose on the New York Stock Exchange where volume came to 382 million shares.

Traders that prefer to look at the broader economic picture will get plenty of data later in the week to review. Traders get reports on consumer sentiment, weekly jobless claims and a final reading on second-quarter gross domestic product before the month wraps up Thursday.

On Friday, traders receive a key report on the manufacturing sector. The same report helped jump-start the September rally when it was released at the beginning of the month.

Bond prices rose Monday, indicating some investors continued to seek safer alternatives to stocks. Even with stocks rising sharply throughout the month, money has regularly flowed into bonds and other perceived safe investments like gold.

The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.53 percent from 2.61 percent late Friday.

Gold rose 10 cents to $1,298.20 an ounce.

Overseas, Britain’s FTSE 100 fell 0.5 percent, Germany’s DAX index fell 0.3 percent, and France’s CAC-40 fell 0.4 percent. Japan’s Nikkei stock average jumped 1.4 percent.