IBM’s big acquisition of cloud computing software company Red Hat for $34 billion led to a short rally Monday.
The deal, announced late Sunday, pushed the Nasdaq and S&P 500 up in early trading. But the Nasdaq had given up its gains by midday and the S&P 500 was only slightly higher.
The Dow, which includes IBM (IBM) as one of its 30 stocks, was still up 65 points, or 0.3% — despite the fact that IBM sank almost 3% to a new multi-year low.
But tech stocks struggled to remain in positive territory. In addition to IBM, Big Blue rival Microsoft (MSFT) was lower, while as well Apple (AAPL), Intel (INTC) and Cisco (CSCO) were flat.
Concerns that Big Blue may be paying too much for Red Hat (RHT), which soared 45%, may have hurt tech and the broader market. The IBM deal was also the main bit of news since there were no significant earnings or economic reports of note Monday.
Monday’s move higher for the Dow is an encouraging sign, though, after last week’s extreme volatility, when stocks fell for a variety of reasons.
Disappointing earnings and guidance from industrial bellwethers 3M (MMM) and Caterpillar (CAT) played a part, as did worries that tech giants like Netflix (NFLX) and Amazon (AMZN) were starting to look overvalued.
Weak housing market data hurt big bank stocks as well.
To top it all off, investors remain nervous about the trade tension with China, a stronger dollar eating into profits, and rising interest rates from the Federal Reserve.
But earnings take center stage later this week. Apple, Facebook (FB), General Electric (GE), General Motors (GM), Coca-Cola (KO), Starbucks (SBUX), Kraft Heinz (KHC), Chevron (CVX) and Exxon Mobil (XOM) are among the notable firms to report results.
Wall Street will also be watching Friday’s jobs report very closely for signs of stronger wage growth and a possible uptick in inflation.