US technology stocks gained on Monday ahead of an announcement by Web search company Google Inc that it will acquire online video service YouTube Inc, offsetting concerns surrounding North Korea's nuclear test.
Google shares rose to their highest in more than five months after a source familiar with the matter said the Internet search company would announce a deal to buy YouTube. After the market closed, Google confirmed the speculation, saying that it would pay $1.65 billion in stock for YouTube.
"This is a very good move for Google strategically as it opens to them the possibility to grow in one Internet area where they were not very big - that is, video," said Steve Neimeth, portfolio manager for AIG SunAmerica Asset Management in Jersey City, New Jersey.
Thin volume kept Wall Street's reaction muted to North Korea's reported nuclear weapons test. US President George W. Bush on Monday called it "a provocative act" that requires an immediate response from the UN Security Council.
The Dow Jones industrial average was up 7.60 points, or 0.06 percent, to close at 11,857.81. The Standard & Poor's 500 Index was up 1.08 points, or 0.08 percent, to finish at 1,350.66. The Nasdaq Composite Index was up 11.78 points, or 0.51 percent, to end at 2,311.77. Traders said volume was light as the US bond market was closed for the Columbus Day holiday. Markets were also closed in Canada and Japan for public holidays.
"Clearly, the overnight news from North Korea is unsettling, but I think US markets will take cues from global markets," said Barry Hyman, equity market strategist at EKN Financial Services Inc in New York. "If you see weakness in the Asian markets, it will filter through back here."
Shares of Google rose 2 percent, or $8.50, to $429 during the regular session and were the top-weighted gainer in both the S&P 500 and the Nasdaq. In electronic trading after the bell, Google's shares rose to $432, after initially slipping on the announcement.
"We're still seeing tremendous money flow into large caps and technology stocks, which is really supporting the market," Hyman said. Besides Google, some of the S&P 500's top-weighted gainers were megacaps such as International Business Machines Corp, up 1 percent, or 86 cents, at $$83.92, and Caterpillar Inc, up 1.3 percent, or 85 cents, at $68.90.
US regional bank holding company PNC Financial Services Group Inc said it agreed to buy Baltimore-based Mercantile Bankshares Corp for $6 billion in cash and stock, driving Mercantile's shares up 22.2 percent, or $8.16, to $44.94 on Nasdaq. PNC's shares fell 4.4 percent, or $3.20, to $70.40 on the NYSE.
In another corporate deal, the family that controls Cablevision Systems Corp has offered to buy out the cable operator's public shareholders in a deal worth about $7.9 billion. Cablevision's stock rose 10.4 percent, or $2.49, to $26.42 and was the most heavily traded name on the Big Board.
"There's still some M&A action out there. That helps, especially on a Monday," said Victor Pugliese, managing director and head of New York equity trading at First Albany Corp. "But reality could set in on Tuesday, depending on how much rhetoric comes in about North Korea."
Trading was light on the NYSE, with about 1.27 billion shares changing hands, well below last year's daily average of 1.61 billion, while on Nasdaq, about 1.54 billion shares traded, below last year's daily average of 1.80 billion. Advancing stocks outnumbered declining ones by a ratio of 5 to 3 on the NYSE and by 3 to 2 on Nasdaq.