Stocks rise after Murdoch bid
Investors resumed their buying spree on Wall Street Tuesday, driving stocks higher after a bid for media company Dow Jones & Co. revived enthusiasm about takeover activity.
The Dow Jones industrial average reached another record close, its 38th since last October, as big company stocks benefited from the turnaround.
Earlier in the session, stocks wavered on mixed economic data that showed strength in manufacturing but a wilting housing market and weak car sales. After April’s big advance, investors were wary that the current economy wouldn’t justify another move higher on Wall Street.
But the caution dissipated after Dow Jones, which publishes The Wall Street Journal, confirmed that it received an unsolicited bid from Rupert Murdoch’s News Corp. to buy the company for $5 billion, or $60 a share.
“The market kind of just took off from there,” said Todd Leone, managing director of equity trading at Cowen & Co. News of the bid boosted media companies and publishers in particular, but also encouraged buying in other sectors, too, as it reaffirmed the ongoing trend of surging takeover activity in corporate America despite an economic slowdown. “It’s money pouring into the market,” Leone said.
The Dow industrials rose 73.23, or 0.56 percent, to 13,136.14, after falling as low as 13,041.30 in earlier trading.
Broader stock indicators also turned higher after falling for much of the session. The Standard & Poor’s 500 index rose 3.93, or 0.27 percent, to 1,486.30, and the Nasdaq composite index rose 6.44, or 0.26 percent, to 2,531.53.
Bond prices dropped after the manufacturing data, and the yield on the benchmark 10-year Treasury note rose to 4.64 percent, up from 4.62 late Monday.
After investors heard that Dow Jones was a takeover target, the company’s stock surged $20.95, or 58 percent, to $57.28. News Corp., which owns the Fox broadcast network among many other media properties, fell $1.01, or 4.2 percent, to $22.99.
Though takeover fervor gave stocks a boost Tuesday, investors will be closely watching upcoming economic data to decide whether to tread further into record terrain or restrain their buying. April saw the biggest percentage gain in the Dow since December 2003.
“I would expect we spend some time in May digesting that move,” said Arthur Hogan, chief market analyst at Jefferies & Co.
A stronger-than-expected reading on the Institute for Supply Management’s April manufacturing index failed to spark buying early Tuesday. Robust manufacturing activity is good for many U.S. companies, but it reduces the chance that the Federal Reserve will cut interest rates to boost spending — especially amid rising costs, which the ISM’s report described.
The Russell 2000 index of smaller companies rose 1.68, or 0.21 percent, at 816.25.
Advancing issues outnumbered decliners by 6 to 5 on the New York Stock Exchange, where volume came to 1.78 billion shares, up from 1.71 billion at the same point Monday.
Crude oil prices fell $1.31 to settle at $64.40 on the New York Mercantile Exchange ahead of the U.S. government’s weekly inventory report Wednesday.
Overseas, Japan’s Nikkei stock average fell 0.72 percent. Britain’s FTSE 100 was down 0.46 percent, Germany’s DAX index was up 0.42 percent, and France’s CAC-40 was up 0.49 percent.