Markets in Asia fell overnight and all the major European indexes declined in midday trading there. Commodities like oil and gold also retreated, while the dollar inched higher. Bond prices dipped.
Stock futures pared their losses slightly after computer maker Dell Inc. announced plans to buy information technology company Perot Systems Corp. for about $3.9 billion. Dell is offering $30 per share in cash — a 68 percent premium over Perot’s closing stock price on Friday.
Stocks and commodities have been on a relentless ascent since early March as investors make bets that the world economy is healing amid improving activity in the housing and manufacturing industries, and better consumer sentiment. Analysts say breaks in the rally are perfectly healthy.
The benchmark Standard & Poor’s 500 index tacked on a 2.5 percent gain last week, bringing its total rise since March to 58 percent, after Federal Reserve Chairman Ben Bernanke declared the US recession was “likely over.” Investors are now waiting to see what the rest of the Fed has to say this week during its two-day rate-setting meeting, which begins Tuesday.
Meanwhile, a private sector group’s forecast of economic activity on Monday should provide further evidence that the recession is ending. The Conference Board’s index of leading economic indicators is expected to have risen 0.7 percent in August. The index, which is meant to project economic activity in the next three to six months, climbed 0.6 percent in July.
Ahead of the market’s open, Dow Jones industrial average futures fell 38, or 0.4 percent, to 9,695. Standard & Poor’s 500 index futures lost 5.20, or 0.5 percent, to 1,055.80, while Nasdaq 100 index futures fell 8, or 0.5 percent, to 1,713.25.
Overseas, Hong Kong’s Hang Seng index lost 0.7 percent. A number of other Asian markets, including Japan’s, were closed for holidays. In afternoon trading, Britain’s FTSE 100 was down 0.6 percent, Germany’s DAX index dropped 1.2 percent, and France’s CAC-40 fell 0.7 percent.
Shares of Perot Systems shot up 66 percent, or $11.79, to $29.70 in pre-market trading after Dell offered to buy the company for $30 a share in cash in an effort to expand its IT service offerings. Dell shares slid 79 cents, or 4.7 percent, to $15.90.
With major market indicators up more than 50 percent over the past six months, including the Dow Jones industrial average, which is less than 200 points shy of the 10,000 mark, the conventional wisdom on Wall Street is that the market is ripe for a pullback.
Though it is difficult to know what could trigger a sell-off, if one comes at all, the comments from the Fed this week on its interest rate policy could unsettle investors.