US stocks: Markets edge down on energy deals

NEW YORK - US stocks dipped today in a choppy trading session as investors' mood fluctuated between excitement about proposed acquisitions in the energy sector and worries about rising interest rates before the Federal Reserve's meeting next week.

Anadarko Petroleum Corp. said it agreed to acquire Kerr-McGee Corp. and Western Gas Resources Inc. in separate cash deals totaling US$21.1 billion. Another smaller takeover, valued at about US$1.4 billion, involved Energy Partners Ltd.'s plan to buy Stone Energy Corp.

The Nasdaq's decline was curbed by Oracle Corp., whose shares jumped a day after the software maker reported a higher quarterly profit and issued a profit forecast for the first quarter of fiscal 2007. Jefferies & Co. raised its price target on Oracle's stock to US$17.50 from US$17. Oracle shares shot up 4 per cent, or 57 cents, to US$14.90.

"Today the focus has been on the energy sector and the multiple takeovers there," said Tim Smalls, head of US stock trading at brokerage firm Execution LLC in Greenwich, Connecticut.

"Just the fact that we've got three takeovers in the energy sector in one day is remarkable." The Dow Jones industrial average slipped 30.02 points, or 0.27 per cent, to end at 10,989.09. The Standard & Poor's 500 Index inched down 1.10 points, or 0.09 per cent, to finish at 1,244.50. The Nasdaq Composite Index fell 1.51 points, or 0.07 per cent, to close at 2,121.47.

For the week, stocks finished lower, with the Dow down 0.23 per cent, while the S&P 500 slipped 0.56 per cent, and the Nasdaq dropped 0.40 per cent.

Kerr-McGee's stock soared 36.4 per cent, or US$18.31, to US$68.61 and was the biggest positive influence on the S&P 500, while Western Gas shares surged 45.9 per cent, or US$18.76, to US$59.67. In contrast, Anadarko's stock fell 7.2 per cent, or US$3.49, to US$44.90.

In another energy sector deal, Energy Partners Ltd. will buy Stone Energy Corp. for US$1.4 billion, the companies said. Energy Partners shares gained 6.4 per cent, or US$1.15, to US$19.17, while Stone Energy shares rose 1 per cent, or 48 cents, to US$46.71.

Without the energy deals to inspire some buying, Friday's declines in the three major US stock indexes probably would have been more pronounced.

Among the biggest drags on the Dow was the stock of Boeing Co., down 0.8 per cent, or 57 cents, at US$83.39 on the New York Stock Exchange.

Before the opening bell, the government reported that May orders for durable goods fell 0.3 per cent after orders for aircraft took a nosedive last month. Economists had forecast a gain of 0.5 per cent.

The durable goods report stirred investors' worries about slower economic growth and rising US interest rates.

To fight inflation, the Fed is expected to raise the benchmark fed funds rate at its meeting next week and could in an accompanying statement give clues about future rate increases.

Short-term interest-rate futures signaled the market expects the Fed to raise rates again in August.

The heaviest weight on both the Nasdaq and the S&P 500 was Qualcomm Inc., down 4.5 per cent, or US$1.88, at US$39.50. On Thursday, Nokia, the world's biggest cellphone maker, said it would stop making cellphones based on Qualcomm's CDMA technology. But Qualcomm said on Friday that Nokia's decision would not affect its 2006 financial outlook or the growth of the wireless technology.

Trading was moderate on the NYSE, with about 1.41 billion shares changing hands, below last year's daily average of 1.61 billion, while on Nasdaq, about 1.62 billion shares traded, below last year's daily average of 1.80 billion.

Advancing stocks practically matched declining ones on both the NYSE and the Nasdaq.

- REUTERS