Dow Sputters as Rally Runs Out of Steam

With the first quarter's earnings season essentially in the books, the bull run we've seen from  the Dow Jones Industrial Average (DJINDICES: ^DJI  ) over the past weeks ran out of fuel as the blue chips finished down slightly by 0.1%, or 19 points.

On a day with no major earnings releases or significant economic reports, acquisitions stole the headlines, specifically Yahoo!'s (NASDAQ: YHOO  ) purchase of the blogging site Tumblr for $1.1 billion. The deal represents CEO Marissa Mayer's first major acquisition since taking the helm last year, and the blogging service brings Yahoo! 300 million unique visitors a month, about half of which access the site through mobile devices. Elsewhere, drugmaker Actavis said it would purchase Warner Chilcott in an all-stock transaction for $5 billion, and Internet security specialist Websense jumped 29% after agreeing to be taken private by Vista Equity Group for $907 million. The deals helped pump some lifeblood into equities as the Dow was up as much 0.25% at midday, but the rally faded in the afternoon.

Turning to the Dow, Merck (NYSE: MRK  ) was the worst performer, falling 1.7% after FDA reviewers questioned dosage levels in a new sleep aid drug. The commenters said the drug, suvorexant, was effective, but noted that there are dosage-related next-day side effects, "including sedation, which can be of significant concern." Suvorexant is the first in a new line of sleep drugs that blocks chemicals in the brain that are designed to keep people awake. On Wednesday, a group of outside medical experts will give the FDA their opinion on whether or not the drug should be legalized.

Alcoa (NYSE: AA  ) led Dow stocks today, gaining 1.7%, though there was no major news out on the aluminum maker. Alcoa has been one of the poorer performers among the blue chips lately, and is essentially flat this year while the Dow is up 17%. Investors may have been reacting to recent news that the manufacturer will cut 500 jobs at a plant in Quebec in order to alleviate excess capacity. The move will reduce  production levelsby 2.5%. Alcoa and the aluminum industry have suffered lately from low commodity prices, and the company had already idled 13% of its capacity.

Outside the Dow, Apple (NASDAQ: AAPL  ) received a slap on the wrist from Congress after a Senate investigation found that the tech giant employs a group of subsidiaries to help it avoid paying taxes. For example, an Irish subsidiary made a profit of $22 billion in 2011 but only paid $10 million in taxes. Though the tactics are legal, some in Congress consider them exploitative, and Apple's CEO and other executives will speak before a Senate subcommittee tomorrow. The consequences of the investigation are not clear at this point, but they would seem to provide a further headache for a company already reeling after going from investor darling to dud in only a matter of months.

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