Deals, hearty earnings elevate stocks
Stocks shook off last week's doldrums and finished sharply higher on Monday, driven by a round of corporate deal news and strong earnings from Citigroup.
Investors cheered AECOM Technology's $4 billion acquisition of engineering and construction services company URS Corp., sending URS' stock up 11.6 percent and AECOM 8.6 percent.
Citigroup rose 3 percent after the bank turned in better-than-expected results and disclosed it has agreed to pay $7 billion to settle a federal probe into its mortgage securities business. JPMorgan Chase & Co. and Goldman Sachs, due to report earnings Tuesday, also got a lift.
All told, the three major stock indexes notched their second gain in two days. That's a turnaround from last week, when the Standard & Poor's 500 index lost 0.9 percent, its worst showing since April.
Concern about Portugal's Espirito Santo International, which reportedly missed a debt payment last week, harked back to issues that spawned Europe's debt crisis.
However, investors appeared to be reassured any problems would be contained.
“Investors are saying if this Portugal thing really isn't significant from an impact standpoint, and the earnings are coming in good ... stocks ought to be going higher,” said Phil Orlando, chief equity strategist at Federated Investments.
The major indexes rose in premarket trading as investors digested Citigroup's earnings. They opened in the green and held steady through the entire session.
The Standard & Poor's 500 index rose 9.53 points, or 0.5 percent, to 1,977.10. The index is down 0.4 percent from its most recent high of 1,985.44, set on July 3.
Nine of the 10 sectors in the S&P 500 rose, led by energy stocks. Utilities fell the most.
The Dow Jones industrial average added 111.61 points, or 0.7 percent, to 17,055.42. The Dow is down slightly from its July 3 record of 17,068.65.
The Nasdaq composite gained 24.93 points, or 0.6 percent, to 4,440.42.
The three stock indexes are up for the year.
The yield on the 10-year Treasury note rose to 2.54 percent from 2.52 percent late Friday.
With the market trading near highs, investors will be focused this week on a large number of corporate earnings, including quarterly reports from General Electric, Google, Bank of America and Johnson & Johnson.
So far, investors like what they see.
“We got started off with a very good report out of Citibank this morning,” Orlando said. “And economic news this week — retail sales, capacity utilization, housing data, confidence data — is all supposed to be pretty good.”
Recent data point to an improving economy despite a slow start this year.
Employers added 288,000 jobs last month, the fifth consecutive month of gains above 200,000. And the national unemployment rate slid to 6.1 percent, a 5 1⁄2-year low.
More people with jobs means more paychecks, which could boost consumer spending and growth.
“You're starting to stack up some fairly impressive jobs numbers,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “There's a lot of momentum to this market.”
That momentum is helping drive corporate deals. On Monday, generic drugmaker Mylan said it agreed to buy Abbott Laboratories' generic-drug business in developed markets for $5.3 billion. Mylan's stock added $1.04, or 2.1 percent, to $51.24, while shares of Abbott gained 52 cents, or 1.3 percent, to $41.82.
Meanwhile, Kindred Healthcare said it would pay $16 per share to buy up to a 14.9 percent stake in Gentiva Health Services. That's just short of the 15 percent limit imposed by a shareholder rights plan that Gentiva's board adopted earlier this year. Kindred climbed 36 cents, or 1.5 percent, to $24.74, while Gentiva gained 39 cents, or 2.5 percent, to $16.21.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Trax is affordable SUV option
- Renewed fears of Greek default whack stock market
- Mylan discounts speculation of a possible takeover by Teva
- Pa. employers shed 12,700 jobs in March; unemployment rate rises to 5.3 percent
- Glaxo to close Moon office, affecting 274 workers
- Hearings set on new environmental rules for gas, oil drilling in Pa.
- PPG axes 1,700 jobs as part of global restructuring
- Gas price slump has Consol Energy shedding jobs
- Celebrity chef backings, farm-to-table trend help healthy fast-food market thrive
- EU regulators challenge Google’s domain
- Retailer Etsy crafts successful IPO