NEW YORK — The Standard & Poor's 500 index held at a record level on Wednesday as a rally in the bond market increased demand for stocks that pay dividends. Investors were unimpressed with a second bid by Valeant Pharmaceuticals for Botox maker Allergan.
KEEPING SCORE: The S&P 500 was unchanged at 1,912 as of 12:07 p.m. Eastern time. The Dow Jones industrial average fell 17 points, or 0.1 percent, to 16,658. The Nasdaq composite dropped three points, or 0.1 percent, to 4,233.
RECORD RUN: The stock market has edged up to record levels against a backdrop of reports that have shown the U.S. economy is gradually strengthening after a winter slump. The S&P 500 closed above 1,900 for the first time on Friday. On Wednesday, telecom and utilities stocks, traditionally companies that pay big dividends, rose as the bond market rally continued.
DRUG DEAL: Valeant Pharmaceuticals added more cash to its offer to buy Botox maker Allergan in a bid that could now be worth more than $50 billion. The Canadian drugmaker is now offering $58.30, $10 more than its previous offer, and a portion of its own stock for each Allergan share. Allergan fell $7.89, or 4.5 percent, to $157.10. Analysts and investors had been expecting a bigger bid.
TOUGH TIMES: Consumer discretionary stocks, which include retailers, automakers and entertainment companies, fell the most of the 10 sectors that make up the S&P 500 index. Dollar General had the biggest loss. The stock dropped $1.68, or 3 percent, to $54.62 after analysts at Deutsche Bank cut their forecast for the company's earnings, saying that it faces tough pricing competition from other retailers including Walmart and Target.
BUILDERS: Toll Brothers rose after the homebuilder reported that its second-quarter income more than doubled as the company raised its prices and delivered more houses. The results beat Wall Street's expectations and sent the stock up 71 cents, or 2 percent, to $36.33.
BONDS: In the market for U.S. government bonds, the yield on the 10-year Treasury note fell to 2.44 percent from 2.52 percent late Tuesday. The yield is the lowest it's been in 11 months. Bonds have gained this year, pushing yields lower, as economic growth has continued at a moderate pace without stoking inflation.
Bonds are also rising on speculation that the European Central Bank will take some kind of action to stimulate the region's economy at its next policy meeting. That has pushed European bonds yields lower, making U.S. bonds more attractive by comparison. The yield on 10-year German government bonds is currently 1.33 percent.
"In terms of safety and yield the U.S. still is the prettiest girl at the dance," said JJ Kinahan, chief strategist at TD Ameritrade.
COMMODITIES: The price of crude oil dropped 47 cents, or 0.4 percent, to $103.64 a barrel. Gold fell $7, or 0.6 percent, to $1,258.30 an ounce.
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