Dow Jones:11,482.90 (+213.88) Nasdaq:2,555.20 (+47.22) S&P 500:1,204.49 (+25.68)
US STOCKS rose yesterday, erasing last week’s drop, as $21.5 billion in takeovers and valuations near the cheapest level in two years helped the Standard and Poor’s 500 Index to its best three-day rally since 2009.
Motorola Mobility soared 56 per cent as Google agreed to buy the company for about $12.5 billion in cash.
Bank of America rallied 7.9 per cent on plans to exit the international credit-card business by selling its $8.6 billion card business in Canada to TD Bank and leaving the British and Irish markets.
Exxon Mobil and Chevron advanced at least 3.1 per cent, pacing energy-company gains, as oil rose.
The S&P 500 added 2.2 per cent in New York and is up 7.5 per cent in three days.
The Dow Jones Industrial Average climbed 213.88 points, or 1.9 per cent, to 11,482.90.
“We are due for a bounce just from an oversold status,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said.
“Valuations have fallen and there are some MA deals. Takeovers are a byproduct of corporations sitting on tons of cash and CEOs feeling compelled to do something with that. Still, we need to get more clarity that things are starting to stabilise from an economic standpoint before we get more aggressive,” he said.
The S&P 500 was still down 14 per cent from a three-year high at the end of April through August 12th.
More than $2 trillion was erased from US equity values in the last three weeks as Europe’s debt crisis, signs the economy is slowing and S&P’s downgrade of the government’s credit rating left the benchmark gauge for US shares within 29 points of entering a bear market on a closing basis.
Stock futures maintained gains even after a report showed that manufacturing in the New York region contracted for a third straight month in August as orders and inventories dropped.
The Federal Reserve Bank of New York’s general economic index fell to minus 7.7 from minus 3.8 in July, a report showed yesterday. The median forecast in a Bloomberg survey called for a reading of zero, the dividing line between expansion and contraction. – (Bloomberg)