Closing Market Report
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Wall Street rides wave of buyouts
By Tim Paradis
Associated Press
NEW YORK » Stocks spiked higher yesterday as Wall Street joined overseas markets in riding a wave of merger news to bounce back from a losing week. The Dow Jones industrials rose 115 points.
The buyout news, particularly the possibility of an enormous deal that would unite Dutch bank ABN Amro Holding NV with British bank Barclays PLC, propelled stocks higher as investors theorized that companies remain upbeat about the economy if they're willing to cut new deals.
The advance kicked off an important week for economic data; the first reading, a report from the Chicago Federal Reserve, said regional manufacturing slowed in January. The market was also waiting for today's start of the U.S. Federal Reserve's two-day meeting on interest rates. While few expect the Fed will adjust short-term interest rates, investors will be looking for any change in the central bank's posture that could hint at where rates are headed in the coming months.
"I think the markets are very sentiment driven. It does also appear that when the global markets see recovery in one area they all seem to move up and when they see concern in another market they all seem to move down," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. in Toronto.
The Dow rose 115.76, or 0.96 percent, to 12,226.17, its biggest one-day gain since March 6, when the index climbed more than 150 points.
Broader stock indicators also rose sharply. The Standard & Poor's 500 index gained 15.11, or 1.09 percent, to 1,402.06, and the Nasdaq composite index advanced 21.75, or 0.92 percent, to 2,394.41.
The Russell 2000 index of smaller companies rose 8.28, or 1.06 percent, to 787.05.
Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 2.67 billion shares -- down from 3.31 billion shares on Friday, when contract expirations elevated trading volumes.
Light, sweet crude fell 52 cents to $56.59 a barrel on the New York Mercantile Exchange amid concerns that demand could slump.
Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.57 percent from 4.55 percent late Friday. The dollar was mixed against other major currencies, rising to 117.59 yen from 116.73 yen late Friday. Gold prices rose.
The advance in U.S. equities came as stocks overseas rose sharply, even after China's central banks raised interest rates to try to cool the economy.
Merger news helped lift stocks yesterday, especially word that ABN Amro, the largest bank in the Netherlands, is a possible buyout target of Barclays. Britain's Sunday Times issued the report, citing anonymous sources. Both companies declined to comment. ABN rose $5.12, or 14 percent, to $41.36, while Barclay's fell 15 cents to $53.35.
Also, Community Health Systems Inc., which operates hospitals, agreed to acquire Triad Hospitals Inc. for $54 per share, or about $5.1 billion. Community Health fell $2.02, or 5.5 percent, to $34.78, while Triad rose $2.36, or 4.8 percent, to $51.72.