US stocks move higher on encouraging economic data, corporate deal news
New York Mar 30) US stocks moved sharply higher in afternoon trading Monday, on course for a second consecutive gain. Investors cheered encouraging economic data and the latest batch of corporate deal news. Expectations that any increase in the Federal Reserve’s key interest rate this year will be gradual also helped lift the market.
KEEPING SCORE: The Dow Jones industrial average climbed 285 points, or 1.6 per cent, to 17,997 as of 2:42 p.m. Eastern. The Standard & Poor’s 500 index rose 26 points, or 1.3 per cent, to 2,087. The Nasdaq composite gained 53 points, or 1.1 per cent, to 4,944.
CONSUMER REBOUND: The Commerce Department said that consumer spending edged up 0.1 per cent in February following two straight monthly declines. The report also showed consumers’ incomes rose a solid 0.4 per cent, a development that could mean higher spending in coming months.
HOUSING BAROMETER: A gauge of future home sales surged to its highest level since June 2013. The National Association of Realtors reported that its seasonally adjusted index of pending home sales rose 3.1 per cent in February. The report suggests that the spring buying season could open strongly after sluggish sales for much of the winter. KB Home led a broad rally among homebuilders. The stock rose 46 cents, or 3 per cent, to $15.74.
FED FACTOR: Also shoring up markets were remarks on Friday by Federal Reserve Chair Janet Yellen. In her speech, Yellen noted that continued improvement in the U.S. economy means an increase in the Fed’s key interest rate could come later this year, but would likely be gradual.
THE QUOTE: “She continues to put forth the message that there will be a rate hike this year, but it will be quite measured and quite gradual going forward,” said Erik Davidson, chief investment officer for Wells Fargo Private Bank. “The market takes some confidence in that.”
SECTOR VIEW: The 10 sectors in the S&P 500 moved higher, with energy stocks notching the biggest gain. The sector was up 1.8 per cent. Analog Devices led all stocks in the S&P 500, climbing $5.32, or 9 per cent, to $64.17.
DRUG DEALS: Investors bid up several health care companies and drugmakers involved in deals. UnitedHealth Group jumped 2.6 per cent after the insurer agreed to buy pharmacy benefits manager Catamaran. Shares in UnitedHealth added $3.09 to $121.12. Catamaran vaulted 23.8 per cent, adding $11.52 to $59.84. Auspex Pharmaceuticals soared 41.7 per cent after it agreed to be acquired by Teva Pharmaceuticals Industries for about $3.2 billion in cash. Auspex gained $29.59 to $100.49. Horizon Pharma climbed 15 per cent on news it is buying Hyperion Therapeutics for $1.1 billion. Horizon gained $3.27 to $25.09. Hyperion added $3.28, or 7.7 per cent, to $46.02.
KITCHEN REMODEL: Fortune Brands Home & Security has agreed to buy kitchen and bathroom cabinet maker Norcraft Companies for about $600 million in cash. Shares in Fortune Brands rose $2.34, or 5.3 per cent, to $46.64. Norcraft gained $2.60, or 11.4 per cent, to $25.50.
FALLING SHORT: BioDelivery Sciences International plunged 23.5 per cent after the drug developer said its potential treatment for pain related to diabetic neuropathy did not meet its main goal in a key study. The stock fell $3.27 to $10.62.
ENERGY: Benchmark U.S. crude lost 19 cents to close at $48.68 a barrel on the New York Mercantile Exchange.
BONDS: U.S. government bond prices rose. The yield on the 10-year Treasury note edged down to 1.96 per cent from 1.97 per cent late Friday.
METALS: Precious and industrial metals futures closed mixed. Gold fell $15 to $1,184.80 an ounce, silver fell 40 cents to $16.67 an ounce and copper edged up a penny to $2.78 a pound.
Source: CanadianBusiness
