Star-Bulletin news services
Stocks extend rally
on boost by mergers
NEW YORK >> A string of merger announcements gave Wall Street a moderate lift yesterday, extending the market's rally to a second day and pushing the Nasdaq composite index to its highest level in nearly 15 months.
Blue chip stocks, which struggled for much of the session, overcame their losses during the last hour of trading. Analysts attributed the market's advance to a sudden pickup in merger activity.
Yellow Corp. said it was acquiring rival trucking company Roadway, while data storage maker EMC announced it was purchasing competitor Legato. Auto parts maker ArvinMeritor said it will make an unsolicited, $2.2 billion bid to takeover its larger rival Dana Corp.
"What's kind of stirring everyone's interest today are the deals," said Hugh Johnson, chief investment officer at First Albany Corp.
The Dow Jones industrial recovered from a loss of more than 53 points to close up 6.30, or 0.1 percent, at 9,223.09. The gain was a modest addition to Monday's 146.58-point win.
The broader market was also higher. The Nasdaq rose 25.75, or 1.5 percent, to 1,746.46, its highest level in nearly 15 months, or since April 22, 2002, when it stood at 1,758.68. On Monday, the Nasdaq surged 57.25 to score its highest close since May 17, 2002.
The Standard & Poor's 500 index advanced 3.42, or 0.3 percent, to 1,007.84, having gained 18.72 in the previous session.
Advancing issues outnumbered decliners slightly more than 4 to 3 on the New York Stock Exchange. Consolidated volume totaled 1.97 billion shares, up from 1.83 billion on Monday.
The Russell 2000 index, the barometer of smaller company stocks, rose 8.26, or 1.8 percent, to 473.97. The NYSE composite index gained 3.28 to 5,642.44. The American Stock Exchange composite index slipped 4.91 to 972.66.
Investors were initially inclined to collect profits yesterday. But the day's merger announcements, which followed a spate of other merger news in recent weeks, added to the market's belief that corporate America is feeling more secure about the economy.
"It suggests that there is hope, that business leaders have confidence in this recovery and are willing to do some deals," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.
Roadway surged $16.08, or 53.6 percent, to $46.10, while Yellow fell $1.24 to $23.25. Yellow is paying $966 million in cash and stock to acquire Roadway, a huge premium over Roadway's recent market valuation.
EMC fell 50 cents to $11.24 on news it will acquire rival Legato in a stock deal valued at $1.3 billion. The company also announced that its second-quarter results will top analysts' forecast by 3 cents a share. Legato rose 81 cents to $9.91.
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