News that Bank of America and MBIA, a bond-insurance company, had reached a settlement over a long-running dispute propelled both companies’ stocks up. BofA will pay $1.7 billion to MBIA and extend the troubled company a credit line.
MBIA soared 45 percent, or $4.46, to $14.29. Bank of America gained 5 percent, or 64 cents, to $12.88, making it the leading company in the Dow Jones industrial average.
The Dow slipped 5.07 points to close at 14,968.89. The Standard & Poor’s 500 index crept up 3.08 points to 1,617.50, a gain of 0.2 percent.
Six of the 10 industry groups in the S&P 500 rose, with financial companies in the lead.
No major economic reports came out Monday, but a handful of companies reported their quarterly results. Tyson Foods, the nation’s largest meat-processing company, fell 3 percent, the biggest drop in the Standard & Poor’s 500 index, after saying its net income sank as costs for chicken feed rose. Tyson’s stock lost 83 cents to $24.10.
Companies have reported solid quarterly profits so far this earnings season. Seven of every 10 big companies in the S&P 500 have beat the earnings estimates of financial analysts, according to S&P Capital IQ. But revenue has looked weak: six of 10 have missed revenue forecasts.
“Yet again, corporations continue to do more with less,” said Dan Veru, the chief investment officer of Palisade Capital Management.
Veru said the trend is likely to lead to more mergers in the coming months, as cash-rich companies look for ways to raise their revenue. A wave of mergers could shift the stock market’s rally into a higher gear, he said.
The stock market cleared new milestones Friday after the government reported that employers added more workers to their payrolls in recent months. The unemployment rate fell to 7.5 percent, the lowest level in four years.
That news sent the Dow through the 15,000 mark for the first time, while the S&P 500 closed above 1,600, another first.
In Monday trading, the Nasdaq composite rose 14.34 points to 3,392.97, an increase of 0.4 percent. The price of crude oil edged up 55 cents to $96.16 and gold rose $3.80 to $1,468.10 an ounce.
In the market for U.S. government bonds, the yield on the 10-year note inched up to 1.76 percent from 1.74 percent late Friday.
Berkshire Hathaway rose 1.3 percent, or $1.36, to $110. Warren Buffett’s company turned in earnings late Friday that trumped analysts’ estimates for both profit and revenue. Berkshire reported strong gains from its insurance units, Geico and General Reinsurance, its BNSF Railway company and other investments.
In a round of television interviews on Monday, Buffett said that the stock market still appears reasonably priced even though major indexes are at all-time highs. By contrast, bonds are “a terrible investment right now,” he said. Buffett explained that with interest rates at historic lows, a buyer of long-term bonds is bound to take a loss when rates eventually rise.
Among other stocks in the news:
• Sysco dropped 1 percent, or 33 cents, to $34.33, after the food distributor posted net income and revenue that fell short of analysts’ estimates. Sysco’s CEO said the company’s sales were held back by bad weather that made people less willing to spend on meals away from home. Sysco’s
• Monster Beverage sank 2 percent after San Francisco’s city attorney sued the company for allegedly marketing its caffeinated drinks to children. Last week, Monster Beverage filed a suit against the same city attorney over demands that the energy drink maker reduce the caffeine in its drinks and change its marketing practices. Monster lost $1.26 to $56.18.