Wall Street closes up on M&A hopes, strong commodities

Written by Reuters
Wednesday, 09 September 2009 05:33

NEW YORK: US stocks advanced on Tuesday, Sept 8 on an uptick in corporate deal activity while the weak dollar led to gains in commodities, lifting shares of oil and mining companies, according to Reuters.

Kraft Foods Inc, North America's biggest food company, said it was intent on pursuing Britain's Cadbury despite the confectionary company's rejection of a US$16.7 billion Kraft bid made on Monday.

Although Kraft's stock fell nearly 6 percent, other food companies rose, including Hershey Co, which added 1.3 percent to US$39.14.

"Ever since the market's big rally, a lot of folks have been concerned about valuations. But when you see a bid like this, it eases those fears," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, Tennessee.

The dollar fell to its lowest this year against the euro, pushing oil up 4.5 percent and gold temporarily above US$1,000 an ounce.

Chevron rose more than 2 percent to US$70.48, leading the Dow higher, and Freeport-McMoRan Copper & Gold Inc gained 3 percent to US$68.00.

The Dow Jones industrial average closed up 56.07 points, or 0.59 percent, at 9,497.34. The Standard & Poor's 500 Index rose 8.98 points, or 0.88 percent, at 1,025.38. The Nasdaq Composite Index gained 18.99 points, or 0.94 percent, at 2,037.77.

The Kraft bid comes after France Telecom and Deutsche Telekom announced plans to merge their British mobile units.

Last week, Walt Disney Co's said it will buy Marvel Entertainment Inc for US$4 billion, fueling hopes of a pick-up in merger activity.

The news of the rebuff sent Kraft shares down 5.9 percent to US$26.45, but speculation about potential suitors for Cadbury buoyed the overall market sentiment.

Also in the oil sector, Exxon Mobil gained 2.1 percent to US$70.65. The S&P index of energy companies was up 2.6 percent.

Health insurance stocks slid 1.6 percent before U.S. President Barack Obama's address to Congress on Wednesday. He is expected to outline his proposed revamp of the healthcare system.

Shares of General Electric Co advanced 4.5 percent to US$14.50 after J.P. Morgan Securities upgraded the stock, saying it was one of the last equities for which a little good news could still go a long way.

On the Nasdaq, shares of iPod maker Apple Inc rose 2.6 percent to US$172.93 after Morgan Stanley raised its price target to US$200 from US$195. The Morgan Stanley also raised the U.S. systems and PC hardware sector to "attractive" from "in line." - Reuters