Mergers, homes, phones give markets a huge lift
By The Associated Press
Published: Tuesday, Sept. 10, 2013, 12:01 a.m.
The stock market got a boost on Monday from mergers, homes, and phones.
Stocks posted their biggest gains in almost two months. Two big deals suggested growing confidence in the economy: Luxury retailer Neiman Marcus was sold for $6 billion, and Koch Industries bought electronics component maker Molex for $7.2 billion.
Homebuilding stocks were some of the biggest gainers in the Standard & Poor's 500 index after Hovnavian Enterprises said home prices are rising and its backlog jumped almost 27 percent from a year earlier.
Hovnanian rose 11 cents to close at $5.15. PulteGroup, D.R. Horton and Lennar gained. Homebuilder MDC Holdings rose $1.72 to $29.37 after an upgrade from a Citi analyst.
Homebuilding stocks have had a volatile year. Investors have been bullish because the housing market is recovering but worried that rising interest rates make mortgages more expensive for home buyers.
The Dow Jones industrial average rose 140.62 points to 15,063.12. The Dow hit a high of 15,658 on Aug. 2. But worries about Syria and rising interest rates pushed stocks down since then. The last time the Dow closed above 15,000 was Aug. 23.
The S&P 500 index rose 16.54 points to 1,671.71. The Nasdaq composite rose 46.17 points to 3,706.18. Both the Dow and the S&P 500 had their biggest daily gains since July 11.
Two things about the Koch-Molex deal grabbed investors' attention: Its components show up in a wide variety of products, including housing and autos, so Koch's interest suggests that it sees broad economic improvement. Koch is paying $38.50 per share, 31 percent over Molex's stock price on Friday. Molex soared $9.29, or almost 32 percent, to $38.63.
“I think it's really exciting for just about everybody to see that big of a deal go through,” said Kim Forrest, senior analyst with portfolio management firm Fort Pitt Capital Group in Pittsburgh.
Apple gained 1.6 percent to $506.17 in advance of an expected iPhone announcement on Tuesday.
Delta Air Lines jumped $1.87 to $21.76 after news that it would be added to the S&P 500 index.
Stocks in Asia rose lifted by Tokyo's win for the 2020 Summer Olympics, Chinese export growth and an election victory by Australia's conservative coalition. The positive news out of the Asia-Pacific region helped outweigh worries about rising interest rates and Syria, Doug Cote, chief market strategist at ING U.S. Investment Management, said.
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