MarketView for May 20

Summary

Although it was red ink across the board on Monday, nonetheless there was little with the major equity indexes remaining near record levels as concerns about a correction cut earlier gains that had been prompted by news about a flurry of acquisitions.

Both the Dow Jones Industrial Average and the S&P 500 indexes briefly hit all-time intraday highs with the Dow climbing to an all-time intraday high of 15,391, while the S&P 500 edged up to a new intraday record high of 1,672. Both major indexes are up about 17 percent for the year. The Nasdaq hit a 52-week intraday high of 3,509.

The S&P 500 is up nearly 1,000 points from its low in March 2009. And more than 38 percent of the stocks hit a 52-week high within the S&P 500 last week - the highest percentage since at least 1990.

Early in the session, investors' sentiment was brightened by a slew of deal news, including Yahoo’s announced acquisition of Tumblr. Yahoo will acquire Tumblr for $1.1 billion cash, giving the Internet pioneer a much needed social media platform to reach a younger generation of users and breathe new life into its ailing brand. Yahoo shares rose 0.2 percent to $26.58.

 Among the day's best performers were solar companies after shares of JA Solar Holdings soared following an unexpected rise in revenue and a quarterly loss that was far smaller than expected. Shares of JA Solar rose 70.4 percent to $9.56. The company’s focus on margins over volume paid off as the Chinese solar products maker halved its operating loss in the first quarter by selling more panels in high-margin Japan.

Other solar companies' shares such as China Sunergy were up 50 percent to $2.52 and LDK Solar rose 20.4 percent to $1.83. Yingli Green Energy Holdings climbed 13.1 percent to $3.10. Energy stocks also performed well, while consumer staples were the day’s major underperformers.

In other deal news, Actavis gained 1.3 percent to $127.15 after the company said it will acquire Warner Chilcott in a stock-for-stock transaction valued at $5 billion. Warner Chilcott gained 2 percent to $19.60.

Freeport-McMoRan Copper & Gold and Plains Exploration & Production said they would pay shareholders more in dividends if they approved Freeport's roughly $6 billion takeover offer for Plains. Plains shares rose 7.4 percent to $48.94, while Freeport's stock gained 0.6 percent to $32.88.

Wall Street received more feedback from the Fed on Monday with some comments from Charles Evans, the president of the Federal Reserve Bank of Chicago. Evans said the Fed could keep up its current level of bond-buying stimulus, but could end it abruptly in the autumn if by then it was sure that the labor market was on a solid footing. Investors will get more comments from the Fed when Chairman Ben Bernanke testifies before a congressional committee on Wednesday.

The beginning of the end of the Fed's massive bond-buying program, which has given strong support to stock gains, might come sooner than many investors think if recent gains in the U.S. labor market hold.

The Fed will also release minutes from its most recent policy-setting meeting on Wednesday. The minutes will be parsed for signs of the Fed's direction on monetary stimulus.

Approximately 6 billion shares changed hands on the three major equity exchanges; a number that was slightly lower than the year-to-date average daily closing volume of about 6.34 billion shares.