Stocks gain as sell-off fades in Internet, small-cap shares

Stock prices were modestly higher Monday ahead of the two-day meeting of the Federal Reserve Board and a series of key economic reports.

The Dow Jones industrial average gained 87.28 points to 16,448.74. The Nasdaq composite index slipped 1.13 points to 4,074.40, and the Standard & Poor’s 500 index was up 6.03 points to 1,869.43.

Reports on consumer confidence and home prices will be released Tuesday, leading off a series of reports focusing on employment issues.

Oil prices were up 24 cents to $100.84 a barrel and gold slipped $1.80 to $1,299 an ounce.

Pfizer Inc. (NYSE: PFE) added 4.2 percent to $32.04 after proposing to buy AstraZeneca Plc (NYSE: AZN) for about $98.7 billion.

Microsoft Corp. (Nasdaq: MSFT) and Apple Inc. (Nasdaq: AAPL) rallied more than 2.4 percent, leading gains among the largest technology companies.

Bank of America Corp. (NYSE: BAC) dropped 6.3 percent to $14.95 after suspending its planned buybacks and dividend increase because of an error in its capital planning.

About 7.5 billion shares changed hands on U.S. exchanges, 9.3 percent above the three-month average.

U.S. equities began higher as large companies rallied on optimism about merger activity. Stocks turned lower as the U.S. and European Union imposed new sanctions on Russia, while selling in Internet and small-cap stocks spread to the broader market.

Major indexes recovered in the afternoon, turning positive during the final hour of trading.

The Nasdaq composite declined 0.5 percent last week, including a 1.8 percent tumble on April 25, as disappointing results from Inc. (Nasdaq: AMZN) triggered a sell-off in technology shares and tensions over Ukraine intensified.

International Business Machines Corp. (NYSE: IBM) added 1.9 percent to $193.14.

Only four of 41 members in the gauge rose Monday. Yahoo! Inc. (Nasdaq: YHOO) dropped 1.4 percent to $33.99. Amazon slumped 2.4 percent to $296.58. Netflix (Nasdaq: NFLX) tumbled 2.4 percent to $314.21.

A report by the National Association of Realtors showed contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season. The pending home sales index rose 3.4 percent, the first gain in nine months, after a 0.5 percent drop in February that was smaller than initially reported.

A busy calendar this week will give investors more clues about the strength of the economy and the pace of the Federal Reserve’s stimulus program.

The government’s initial tally of first-quarter gross domestic product April 30 may show the slowest expansion in a year. Federal Reserve policymakers will probably reduce the pace of assets purchases designed to stoke the economy.

Three rounds of monetary stimulus have helped fuel economic growth, sending the S&P 500 surging as much as 180 percent from its 2009 low.

Investors are also watching developments in Ukraine. The Obama administration imposed sanctions on seven Russian officials and 17 companies linked to Russian President Vladimir Putin’s inner circle involved in banking, energy and infrastructure.

The sanctions, announced Monday by the White House, are being imposed in conjunction with the European Union, which said Monday it is adding 15 names to its list of previously sanctioned individuals.

Consumer-staples and phone companies had the biggest gains among 10 groups in the S&P 500, climbing more than 1.1 percent. Financial and raw-materials shares declined the most, dropping at least 0.5 percent.

General Electric Co. (NYSE: GE) gained 0.7 percent to $26.78 after CEO Jeffrey Immelt met with France’s President Francois Hollande over the company’s offer for Alstom SA.

NorthStar Realty Finance Corp. (NYSE: NRF) soared 7.3 percent to a record $17.20. American Realty Capital Properties Inc. (Nasdaq: ARCP), the largest owner of single-tenant U.S. buildings, is interested in acquiring NorthStar for about $20 a share, according to a person with knowledge of the matter. That’s a premium of 25 percent to NorthStar’s closing price of $16.03 last week and would value the New York-based company at about $6.5 billion. American Realty fell 3 percent to $12.62.

Newmont Mining Corp. (NYSE: NEM) dropped 6.7 percent to $24.67. Barrick Gold Corp. (NYSE: ABX) said Newmont ended discussions about a takeover, which would have combined the world’s two largest gold producers.

— Bloomberg contributed to this report.

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