Street Sways After Latest AIG Deal

U.S. stocks teetered Monday morning on investor enthusiasm over a fresh pair of acquisitions and some lingering optimism from Friday's employment report.

In its second divestiture in a week, insurer American International Group ( AIG - news - people ) said it will sell Alico, an international life and health insurance subsidiary, to rival MetLife ( MET - news - people ), as it continues to streamline its operations and repay billions in government loans received under the Troubled Asset Relief Program. The cash-and-stock deal is worth $15.5 billion, including $6.8 billion in cash and the rest in equity securities of MetLife. Shares of AIG jumped 5.3% in early trading while MetLife added 4%.

Last week, AIG said it would sell Asian life insurance unit AIA to the U.K.'s Prudential ( PUK - news - people ) for a mix of cash and equity worth $35.5 billion. (See "Prudential Picks Up AIA.") The insurer received $182.5 billion in aid packages from the U.S. government since September 2008 in return for an 80% equity stake. (See "Fed Rescues AIG.") As of the close of the fourth quarter AIG still owed taxpayers $129.3 billion, but the recent deals have put a dent in that figure.

The major indexes started the day higher, but near midday slipped back into the red. The Dow Jones industrial average was down 15 points to 10,551 and the S&P 500 fell 1 point to 1,138. The Nasdaq managed to hold onto a narrow 3-point advance, to 2,329.

In the energy sector, Australia's Arrow Energy said it received a fresh takeover bid from Royal Dutch Shell ( RDSA - news - people ) and PetroChina ( PTR - news - people ) for $3.3 billion Australian dollars ($3 billion) in cash and stock, including $4.45 ($4.02) in cash per share plus a share in Arrow's international business. The Brisbane-based energy company had previously announced its intention to conduct an IPO of the unit, 10% of which is already owned by Netherlands-based Royal Dutch Shell. Last summer Royal Dutch Shell bid $2.5 billion for Arrow. American depositary receipts of Royal Dutch Shell gained .5% in morning trading, while PetroChina ADRs traded up 1.7%.

As Wall Street continues to absorb Friday's encouraging jobs report, investors look ahead to reports on wholesale and business inventories, retail sales and consumer sentiment, all due out later this week. Barclay's Capital analyst Barry Knapp noted that manufacturing sentiment has shown signs "of topping out at very high levels" recently, "much like they did back in 2004," making it difficult "to generate 'surprises' and the market ultimately pays the price" when expectations are elevated.