Despite Wrigley deal, stocks pull back

By Charley Blaine and Elizabeth Strott

Stocks went nowhere today, despite a very sweet deal for the shareholders of chewing gum maker Wm. Wrigley Jr. (WWY, news, msgs).

Wrigley agreed to a $23 billion all-cash bid from rival Mars, with financing coming from Warren Buffett's Berkshire Hathaway (BRK.A, news, msgs). Wrigley shares were up 23% on the day to $76.91.

At the close, the Dow Jones industrials fell 20 points to 12,872. The Nasdaq Composite Index was up 1.5 points to 2,424. The Standard & Poor's 500 Index finished at 1,396, down nearly 1.5 points on the day.

The market overall didn't get a sugar high from the Mars-Wrigley deal, partly due to the Federal Reserve. The central bank is expected to announce a cut in its key federal funds rate from 2.25% to 2% on Wednesday; few investors want to make big bets ahead of the Fed decision.

Continuing issues also worry many investors: the U.S. recession; the dreadful state of the housing market in many markets, especially Florida and California; rising food and energy prices; and the health of the dollar.

To that, Market Dispatches would add simple wariness. The stock market has had a strong rebound off the bottoms seen this past winter. The Dow is up 11% from its bottom in January, recovering nearly half of its loss from the Oct. 9, 2007 peak. The S&P is up 11.3% off its March 17 low.

But there isn't a lot of confidence. You can see it in the New York Stock Exchange volume, which was 1.2 billion shares today. The average over the last year or so has been about 1.6 billion shares.

And the S&P 500 crossed 1,400 this afternoon for the first time since Jan. 15, but it couldn't hold that level at the close. The index has been flirting with 1,400 since April 18.

The wariness showed up in the market's reaction to Visa's (V, news, msgs) first-quarter earnings, its first as a public company. The stock fell more than 7% in after-hours trading, even as the company beat Wall Street estimates handily.

Lastly, the wariness showed in financial stocks, which weakened at the close. Citigroup (C, news, msgs) was up as much as 2.8% to $27.35 at about 2 p.m. but finished with a gain of 21 cents to $26.81. The Select SPDR Financial (XLF, news, msgs) exchange-traded fund, which mirrors the S&P 500 financial sector, was up 2.2% at 3:30 p.m. Then, it fell back and closed down slightly on the day.

Meanwhile, 13 of the 30 Dow stocks finished higher, with General Motors (GM, news, msgs) the leader with a 2.6% gain $21.94. That was a reaction to investor Kirk Kerkorian's investment in Ford Motor (F, news, msgs). Ford was up 9.5% to $8.21.

A total of 241 S&P 500 stocks finished higher today. But 53 stocks in the Nasdaq-100 Index ($NDX.X) were higher. The index was up nearly 5 points to 1,923. Apple (AAPL, news, msgs) and Research In Motion (RIMM, news, msgs), up 1.5% to $172.24 and 2% to $122.39, were the leaders.

Crude oil had jumped to $119.93 but fell back to a gain of 23 cents to $118.75.

Mars, Wrigley, Buffett and Big Candy

There's Big Oil. Now, with Mars and chewing gum company Wm. Wrigley Jr. planning to merge in an $80-a-share deal, there's Big Candy.

Warren Buffett's Berkshire Hathaway is helping finance the deal, announced late Sunday, by buying a minority interest in Wrigley, which will operate as a standalone subsidiary.

Berkshire Hathaway gets into the deal by$4.4 billion of subordinated debt to help Mars pay for the acquisition. In addition, Buffett will get a $2.1 billion equity stake in Wrigley after the business becomes a Mars subsidiary. That stake will be sold to Berkshire at a discount to $80 share paid to Wrigley shareholders.

"Both companies have great brands," Buffett told CNBC this morning. "There's really nothing that can go wrong with something like the Wrigley and Mars brands."

The combination of Berkshire Hathaway, Mars and Wrigley could create a tough competitor to both Hershey (HSY, news, msgs) and Cadbury Schweppes (CSG, news, msgs) -- but both stocks rose this morning because of Buffett's interest in the sector. Berkshire Hathaway owns 8.6% of Coca-Cola (KO, news, msgs). Berkshire Hathaway was up 1.3% to $128,460.

Wall Street believes a Mars-Wrigley combination could cause Cadbury and Hershey to merge: Hershey jumped $1.45, or 4.2%, to $36.19 and Cadbury Schweppes was up $1.35, or 3%, to $46.15.

• Video: Buffett's sweet deal

There has been other consolidation in the candy business recently, and surging cocoa and milk prices have weighed on the sector. In 2005, Wrigley bought the Kraft Foods (KFT, news, msgs) candy business, which included Life Savers and Altoids mints.

Wrigley also makes Extra, Orbit and Juicy Fruit gum (one of Buffett's favorites, he said on CNBC this morning; he also said he likes Skittles). Berkshire Hathaway owns See's Candies, and Mars makes Snickers, Twix and Skittles.

Visa outlook, profit-taking hit shares

Visa (V, news, msgs) earnings were what everybody wanted, but the stock was more than 6% lower to $71 in after-hours trading.

The stock had closed in regular trading at $75.63.

The credit card company said it earned $314 million or 39 cents a share, up 28% from a year ago. After accounting for one-time items, the company earned 52 cents a share, beating the Wall Street estimate of 45 cents a share.

Revenue was $1.45 billion, up 22% from a year ago.

Investors may have been cashing in profits from Visa's record $19-billion initial public offering on March 18, when the company raised $19 billion. The stock has jumped nearly 80% from the $42-a-share price in the offering.

Another issue was its outlook. While it showed a huge gain in earnings, it expects 11%-to-15% revenue growth for the next three years and annual adjusted earnings-per-share growth of 20.0% or greater. That was lower than Wall Street expected.

Visa processes credit cards and collects revenue on every transaction involving one of its cards, whether on credit or debit. Its strongest growth in the quarter was from Central Europe, up 44% from a year ago, and Latin America, up 33%.

Energy prices -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$118.75	$118.52	$0.23	16.90%	23.72%
Heating oil (per gallon)	$3.2988	$3.3028	-$0.0040	8.19%	24.51%
Natural gas (per million BTU)	$11.2800	$10.9630	$0.3170	11.67%	50.74%
Unleaded gasoline (per gallon)	$3.0307	$3.0537	-$0.0230	15.84%	21.68%

A new partner for United?

It didn't United Airlines parent UAL (UAUA, news, msgs) long to find another potential merger partner.

A day after Continental Airlines (CAL, news, msgs) called off merger talks with UAL, US Airways (LCC, news, msgs) emerged as a potential candidate for UAL. US Airways shares jumped 20% to $8.62 on hopes for a deal. The carriers did say they were talking, but a deal did not appear imminent.

Continental on Sunday called off merger talks with United, days after reports said the two were in advanced discussions about joining forces. The problem, CEO Larry Kellner indicated, was that Continental is stronger financially and easier to manage. Merging with UAL would enhance none of those strengths.

• Video: Continental remains independent

Continental was fell 1.5% to $16.96; UAL was down 2.6% to $14.81.

Delta Air Lines (DAL, news, msgs) and Northwest Airlines (NWA, news, msgs) earlier announced plans to merge to combat soaring fuel prices and the slowing economy.

Kerkorian buys stake in Ford

Billionaire investor Kirk Kerkorian has liked Chrysler twice and General Motors once. Now he likes Ford.

Kerkorian's Tracinda Corp. offered $8.50 per share, or $170 million, for 20 million shares of Ford -- just under 1% of the company. Tracinda already owns 4.7% of Ford. The new offer is a 13% premium to Ford's $7.50 closing price on Friday.

Ford shares jumped 10% to $8.22 this afternoon.

Last week, Ford reported a surprising first-quarter profit of $100 million, sparking hopes that Chief Executive Officer Alan Mulally's turnaround plan is starting to work.

Kerkorian's interest in the automaker could add more weight to Ford's comeback.

• MSN's Stock Challenge: Win $15,000!

Kerkorian tried to buy Chrysler in 1995 and accumulated a stake in General Motors (GM, news, msgs), becoming the biggest shareholder in the company, before unloading it all in 2006.

Kerkorian then made a bid for Chrysler in April 2007, when the company was split from Daimler; Chrysler was taken private by Cerberus Capital Management.

Will Microsoft go hostile on Yahoo?

Microsoft's (MSFT, news, msgs) deadline for Yahoo (YHOO, news, msgs) to accept its $31-per-share offer came and went this weekend without word from either company.

But most observers expect Microsoft to announce its next move this week. (Microsoft is the publisher of MSN Money.)

• Microsoft confronts a tough choice on Yahoo

Microsoft CEO Steve Ballmer said last week that the software giant wouldn't boost its bid for Yahoo. Microsoft might take its offer directly to the shareholders or even walk away from a deal.

Microsoft offered $44.6 billion for Yahoo on Feb. 1, but Yahoo rejected the bid as too low.

Yahoo shares finished down 1.4% to $26.43. The stock, down 7.4% in the last four trading sessions. is just above its 200-day moving average.

Microsoft was off 2.8% to $28.99, its first close under $29 since April 16 and just above its 50-day moving average.

If Microsoft does start a proxy fight or makes a tender offer, the move would be part of a larger trend, Bloomberg News said today.

U.S. companies armed with more than half a trillion dollars in cash are stepping up efforts to take over rivals weakened by depressed stock valuations.

About 21% of the bids for American firms through April 14 were unsolicited, double the amount of a year earlier, and on pace to set a 20-year record, according to Bank of America analysis that counts deals by dollar value.

Cash-rich acquirers have the upper hand in a U.S. merger market that's shrunk by about half to $295 billion from 2007, deflated by the credit contraction that ended a record leveraged-buyout boom. Two straight quarterly declines in the S&P 500 Index mean bargain prices, and a 77% drop in LBO's eliminates one escape route from unsolicited bids.

Verizon profit rises

Verizon Communications (VZ, news, msgs) this morning reported a 10% rise in first-quarter profit.

The company earned $1.64 billion, or 57 cents per share, up from $1.49 billion, or 51 cents per share, in the same period a year ago. Adjusted earnings were 61 cents per share, matching the consensus estimate.

Verizon shares were up 2% to $37.79.

• Video: The euro is still booming

Verizon Wireless, the company's venture with Vodafone, said it added 1.5 million subscribers in the quarter, above Wall Street's estimate of 1.42 million. Verizon's churn rate -- the percentage of customers who cancel and switch to rival carriers -- was flat at 1.2% from the fourth quarter.

Rival AT&T (T, news, msgs) said the first-quarter churn rate at its wireless division was 1.7%.

Short hits from the markets -- 4 p.m.

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.330%	1.285%	0.045	-1.48%	-57.64%
5-year Treasury note yield	3.135%	3.176%	-0.041	23.67%	-9.26%
10-year Treasury note yield	3.835%	3.866%	-0.031	10.65%	-4.96%
30-year Treasury bond yield	4.565%	4.589%	-0.024	5.06%	2.38%
Currencies
U.S. Dollar Index	72.800	73.030	-0.230	0.88%	-5.08%
British pound in dollars	$1.9924	$1.9853	0.0071	0.44%	0.16%
Dollar in British pounds	£0.5019	£0.5037	-0.0018	-0.44%	-0.16%
Euro in dollars	1.5647	1.5625	0.0022	-0.66%	7.06%
Dollar in euros	€ 0.6391	€ 0.6400	-0.0009	0.66%	-6.59%
Dollar in yen	104.39	104.42	-0.03	4.59%	-6.67%
Canadian dollar in U.S. dollars	$0.987	$0.988	-$0.0005	0.96%	-0.59%
U.S. dollar in Canadian dollars	$1.014	$1.013	$0.0011	-0.97%	0.59%
Commodities
Gold	$895.50	$889.70	$5.80	0.65%	6.86%
Copper	$3.9290	$3.9110	$0.02	0.46%	29.20%
Silver	$17.1230	$16.9580	$0.17	0.97%	14.77%
Corn	$6.0000	$5.7725	$0.23	5.77%	31.72%
Crude oil (NYMEX) (per barrel)	$118.75	$118.52	$0.23	0.19%	23.72%