Closing Market Report
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M&A activity gives market a slight push
By Madlen Read / Associated Press
NEW YORK » Wall Street advanced yesterday ahead of the July Fourth holiday as investors drew confidence from a smaller-than-expected dip in factory orders and new merger-and-acquisition activity.
The market was relieved to hear from the U.S. Commerce Department that U.S. factories saw demand dip in May by just 0.5 percent; most analysts had predicted a decline of more than 1 percent.
Takeover news gave the market an extra boost. Kraft Foods Inc. said it offered $7.2 billion to buy the biscuit division of French food company Groupe Danone SA; Canadian miner Teck Cominco Ltd. bid $3.87 billion for Canadian copper miner Aur Resources Inc.; and a major Wendy's International Inc. shareholder said he is considering buying the chain.
The M&A activity helped the stock market extend Monday's steep gains, but most analysts aren't taking this week's movements too seriously, given that trading volumes are low. The stock market closed early at 1 p.m. EDT.
"Historically, the two days leading up to the July Fourth holiday have been positive for the equity markets," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. Investors shouldn't breathe a sigh of relief just yet; the few days after July Fourth are often negative, he said, and the market's recent choppiness is expected to continue after that.
The Dow Jones industrial average rose 41.87, or 0.31 percent, to 13,577.30, adding to Monday's 126.81-point gain.
Broader stock indicators also climbed. The Standard & Poor's 500 index gained 5.44, or 0.36 percent, to 1,524.87, and the Nasdaq composite index lifted 12.65, or 0.48 percent, to 2,644.95.
The Russell 2000 index of smaller companies rose 3.14, or 0.37 percent, to 848.20.
Bonds fell after the better-than-anticipated factory orders data. The yield on the benchmark 10-year Treasury note rose 5.04 percent from 4.99 percent late Monday.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 764.3 million shares -- down from 1.38 billion shares Monday, a full day of trading.
A barrel of light sweet crude rose 9 cents to $71.18 on the New York Mercantile Exchange.
The dollar rose against most other major currencies, except the British pound, which has strengthened to 26-year highs versus the U.S. currency. Gold prices slipped.
Kraft fell 87 cents to $34.66 after saying it made an offer to buy such European brands as LU, Petit Dejeuner, Tuc, and Mikado from Danone. Danone said its board is considering the bid on an exclusive basis.
Wendy's rose $1, or 2.7 percent, to $38.39 after billionaire investor Nelson Peltz said in a letter to Wendy's chairman his company, which owns fast-food chain Arby's, would be a "natural, strategic buyer" for Wendy's, but that Wendy's is preventing him from doing so.
The financial sector helped lead stocks higher yesterday, with Merrill Lynch & Co. and JPMorgan Chase & Co. each rising more than 1 percent and Goldman Sachs Group Inc. climbing 2.5 percent.
Airline stocks jumped yesterday, after Continental Airlines Inc. reported stronger-than-expected growth in June unit revenue. Continental climbed 11.1 percent; American Airlines parent AMR Corp. rose 4.8 percent; and US Airways Group Inc. rose 7 percent.