Wall Street Gets Lift From Merger Activity, Earnings
New York: US stocks advanced on Wednesday and the Dow surged to a new intraday high, buoyed by the latest merger news, as investors sorted through the latest batch of corporate earnings.
Merger and acquisition activity continued to thrive on Wall Street. Time Warner shares jumped 18.1 per cent to $83.87 as the biggest boost to the S&P 500 after Twenty-First Century Fox confirmed it made an $80 billion takeover offer for the company that was turned down. Twenty-First Century Fox shares lost 1.7 per cent to $33.54.
Also supporting gains was chipmaker Intel, which climbed 6.2 per cent to $33.69 following second-quarter results that topped analysts' estimates. The company also forecast third-quarter revenue above Wall Street's expectations.
"It's a combination of M&A that has been pretty consistent - about every day we wake up to at least one, if not two deals - and earnings have continued to be good," said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia.
"Things have started off pretty well, we haven't seen a whole lot outside of the financials but the few we have seen have been pretty good."
A partnership struck between IBM and Apple Inc also helped boost indexes. A deal was struck between the tech giants in which IBM will exclusively sell iPhones and iPads loaded with applications geared at enterprise clients this fall.
IBM shares gained 1.6 per cent to $191.43 as the Dow's biggest boost while Apple advanced 1.1 per cent to $96.36.
The S&P technology sector gained 0.9 per cent.
Bank of America lost 2.1 per cent to $15.48 after the second-largest US bank by assets reported a 43 percent drop in second-quarter profit as mortgage revenue fell and litigation costs increased.
Yahoo shares also declined, slumping 4.4 per cent to $34.03 after disappointing second-quarter results and outlook, although the company pledged to pay its shareholders at least half the proceeds from Alibaba Group Holding Ltd's mega-IPO this fall.
In other merger news, Italy's GTECH will buy US slot machine maker International Game Technology for $6.4 billion including debt. IGT shares jumped 8.8 per cent to $16.86.
The Dow Jones industrial average rose 46.1 points, or 0.27 per cent, to 17,106.78.
The S&P 500 gained 6.09 points, or 0.31 per cent, to 1,979.37.
The Nasdaq Composite added 19.19 points, or 0.43 per cent, to 4,435.58.
Producer prices rose 0.4 per cent in June against expectations calling for a 0.2 per cent increase, with gains across most categories, indicating some inflation at the factory gate.
Other data showed industrial production edged up 0.2 in June, but fell short of the 0.4 per cent estimate. The National Association of Home Builders/Wells Fargo housing market index rose to 53 in July, a six-month high, from 49 in the prior month.
After the closing bell, results are due from S&P 500 companies including eBay and SanDisk.
S&P 500 companies' profits are expected to grow 5.2 per cent in the second quarter, according to Thomson Reuters data, down from the 8.4 per cent growth forecast at the start of April. Revenue is seen up 3.2 per cent.
Copyright @ Thomson Reuters 2014
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