Stocks rise on takeover deals
Stocks surged higher Friday as another round of corporate takeovers prodded investors to continue a largely uninterrupted months-long buying streak. The Dow Jones industrial average registered its 24th record close this year and the Standard & Poor’s 500 index came within striking distance of its record high.
Beyond the buyout news, which has lent buoyancy to the markets for months, a stronger-than-expected reading on consumer sentiment helped investors set aside some concern that consumers unnerved by higher gas prices would pull back on spending and up-end the economy’s smooth slowdown.
The latest takeover news, including deals involving marquee names like General Electric Co. and Microsoft Corp., signaled that the enormous amount of liquidity that has lubricated global stock markets in recent months doesn’t appear on the verge of evaporating.
“The M&A activity and earnings seem to be holding up better than expected. I think you’re going to see more of this,” said Bill Dwyer, chief investment officer at MTB Investment Advisors, referring to merger and acquisition deals as well as surprisingly strong profits.
The Dow rose 79.81, or 0.59 percent, to 13,556.53. The blue chips set a new trading high of 13,558.48, having crossed 13,500 for the first time on Thursday.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 10.00, or 0.66 percent, to 1,522.75, its highest level in more than six years. The index came within fewer than 5 points of its record close of 1,527.46, set in March 2000.
The Nasdaq composite index rose 19.07, or 0.75 percent, to 2,558.45.
While the week saw a number of mixed finishes for the major indexes, investors seemed unfazed by the mostly modest pullbacks. Bigger consolidations aren’t unusual given the string of gains seen in the last month in particular. For the week, the Dow rose 1.73 percent, while the S&P 500 gained 1.12 percent and the Nasdaq lost 0.15 percent.
Bonds fell as the market appeared to look past China’s announcement of an interest rate increase and a widening of the range at which the yuan can trade. A rising Chinese currency would make Chinese imports less competitive in the United States. The yield on the benchmark 10-year Treasury note rose to 4.81 percent from 4.76 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose 8 cents to $64.94 per barrel on the New York Mercantile Exchange.
Investors appeared unfazed by rising oil prices, instead focusing on corporations’ continued appetite for merger deals. The Wall Street Journal reported GE is near a deal to sell its plastics division to a Saudi Arabian industrial giant for about $11 billion. GE rose 43 cents to $36.96.
Microsoft struck an agreement to acquire online advertising company aQuantive Inc. for about $6 billion in cash, paying a premium following a rush of major online ad deals by its competitors in recent weeks. AQuantive soared $27.92, or 77.8 percent, to $63.79, while Microsoft slipped 15 cents to $30.83.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 1.65 billion shares.
The Russell 2000 index of smaller companies rose 8.02, or 0.98 percent, to 823.66.
Overseas, Japan’s Nikkei stock average closed down 0.57 percent. Britain’s FTSE 100 rose 0.94 percent, Germany’s DAX index closed up 1.44 percent at its highest level of the year, and France’s CAC-40 rose 1.23 percent.