By Kristina Peterson
Major stock averages rose slightly Monday thanks to merger news
and improving data on employment among manufacturers and personal
spending.
The Dow Jones Industrial Average (DJI) was recently up 67
points, or 0.7%, at 10,391.01, just points shy of its 2009
close.
Caterpillar (CAT), which often benefits from signs of strength
in the global economy's manufacturing sector, was among the Dow's
big winners, up 1.6%. Travelers (TRV) was also strong, up 1.2%,
amid a broader rally among insurers after U.K.-based Prudential PLC
(PUK) agreed to buy American International Group's (AIG) Asia
operations for $35.5 billion in cash and stock.
Prudential PLC isn't related to U.S insurer Prudential Financial
Inc. (PRU)
Speculation that a wave of deal making might continue helped the
small-cap Russell 2000, which includes many companies that might be
acquisition targets of larger rivals. It rose 1.9% in recent
action, outperforming other stock-market yardsticks. The measure
recently stood at 640.75, up 2.5% on the year.
The Nasdaq Composite Index (RIXF) was up 1.4%to 2269.48. The
Standard & Poor's 500-share index (SPX) managed a 0.9% rise to
1114.3, off by a fraction for the year.
"It's encouraging to see a lot of willing buyers out there,"
said strategist Jack Ablin, of Harris Private Bank in Chicago. "It
calls attention to the fact that there's a lot of corporate cash
sitting on balance sheets, which makes you wonder who else might be
willing to step up and buy something at a bargain."
Some investors, however, saw a downside to the Prudential deal,
which helped to send the British pound down sharply on fears that
completion of the merger would entail heavy selling of the sterling
in lieu of dollars.
One pound cost $1.4987 on Monday, down from $1.5249 late Friday.
The euro was also sharply lower as some traders bet that steps to
prop up heavily indebted Greece might be near. The U.S. Dollar
Index (DXY)climbed 0.5%.
The greenback's strength helped to fuel a general pullback in
prices of raw materials, with the Dow Jones-UBS Commodity Index off
0.7%. But copper was a notable exception to the pullback, in part
because of the weekend's earthquake in Chile, which is the world's
largest producer of the metal.
Traders said there was a rush to cover bearish bets Monday,
though most participants expect little near-term disruption to
Chile's mining industry, which is centered around ore deposits
several hundred miles from the epicenter of the recent
earthquake
"The market reacted rather emotionally," said Mike Frawley,
global head of metals for the futures brokerage Newedge. But he
added: "As tragic as the events were, the copper production seems
to have been spared, notwithstanding some power outages to a few
production sites."
In New York trading, copper futures jumped 2% to $3.3330 per
pound, the highest close since Feb. 19. Traders described the
buying as a knee-jerk reaction. Prices of gold, silver, and oil
were lower.
In U.S. economic data, the Institute for Supply Management
reported Monday that its index of manufacturing activity slipped a
bit to 56.5 last month, but still reflected an expansion in
manufacturing. Its employment index grew for the third consecutive
month.
Personal spending climbed slightly more than expected, though
personal income rose less than anticipated. The saving rate slowed
to the smallest since 2008 and the core price index for personal
consumption expenditures, excluding volatile food and energy, rose
1.4%, compared to January 2009. Construction spending also declined
0.6%, as expected.
Among stocks to watch, Scandisk (SNDK) leapt 12.1% after
boosting its first-quarter guidance to reflect increased demand for
memory chips.
German drug and chemical company Merck KGaA, unrelated to the
U.S. drug maker, said it will buy biotech supply company Millipore
(MIL) for $7.2 billion, lifting Millipore shares by 11.2%. American
depository shares of Merck KGaA gained 2.9%.
Market-index firm MSCI said it will buy proxy adviser
RiskMetrics Group (RISK) for $1.55 billion, sending RiskMetric
shares up 13.3%. Class A shares of MSCI declined 4.6%.
New York Stock Exchange composite volume was light, hitting 3.3
billion shares. Advancers outnumbered decliners by almost four to
one.
Treasury prices advanced slightly, with the 10-year note up 3/32
to yield 3.608%.