Iraq elections, mergers boost market
Successful elections in Iraq and a bevy of merger and acquisition deals pushed stocks higher Monday in moderately heavy trading, with beaten-down tech stocks enjoying the largest gains.
The success of the Iraqi elections despite attacks on 38 of the nation’s polling centers, along with OPEC’s decision to maintain current oil production levels, removed a pair of obstacles that had prevented many investors from getting into the market. The news out of the Middle East failed to halt rising oil prices, however, with a barrel of light crude settling at $48.20, up $1.02, on the New York Mercantile Exchange.
The flurry of new deals, meanwhile, showed corporate America’s confidence in the economy, which further cheered Wall Street. Among the deals announced Monday, Metlife Inc. said it would purchase Citigroup Inc.’s Travelers Life & Annuity division for $11.5 billion.
“Not a bad Monday to wake up to,” said Jay Suskind, head trader at Ryan Beck & Co. “We’ve had a lot of positive catalysts here, and I think people are seeing that January has been very oversold. So we’re moving forward, and the market is now focused back on growth and earnings.”
The Dow Jones industrial average closed up 62.74, or 0.6 percent, to 10,489.94.
Broader stock indicators rose substantially. The Standard & Poor’s 500 index was up 9.91, or 0.85 percent, at 1,181.27, and the Nasdaq composite index gained 26.58, or 1.31 percent, to 2,062.41.
Monday’s move higher was actually less than many analysts had expected, given the success in Iraq and the wave of merger deals. But a handful of issues remain for Wall Street in the week ahead, including the Federal Reserve’s decision on the nation’s benchmark interest rate, due Wednesday, and Friday’s job creation report from the Labor Department. By the end of the week, investors are likely to have a very clear picture of the economy and can invest with more confidence, analysts said.
In economic news, personal incomes rose by 3.7 percent in December, according to the Commerce Department, up from 0.4 percent in November. Much of that gain was attributed to Microsoft Corp.’s special $3-per-share dividend paid out Dec. 2, which pumped $32 billion into the economy.
New home sales rose 8.9 percent in December to an annualized 1.098 million homes, better than Novembers 12.1 percent drop, but less than the 1.2 million home sales expected on Wall Street.
With the acquisition of Travelers, Metlife is poised to become the largest individual life insurer in North America, while giving Citigroup a stake in Metlife and a large infusion of cash. Metlife fell 19 cents to $39.75, while Citigroup added 67 cents to $49.05.
Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.01 billion shares, compared with 2.04 billion on Friday. The Russell 2000 index of smaller companies was up 11.02, or 1.8 percent, at 624.02.
Overseas, Japan’s Nikkei stock average rose 0.59 percent. In Europe, Britain’s FTSE 100 closed up 0.4 percent, France’s CAC-40 gained 1.12 percent for the session, and Germany’s DAX index climbed 1.26 percent.