Stocks Advance on Takeover Deals
Stocks continued their recent seesaw trading pattern Monday, as major indexes recovered much or all of Friday’s losses, helped by takeover announcements and some upbeat data on home sales.
Lower oil prices and stable bond yields supported share prices. But some analysts said low trading volume made them cautious about the staying power of Monday’s rally.
The Dow Jones industrial average gained 84.76 points, or 0.8%, to 10,242.47, after sliding nearly 61 points Friday.
After tumbling April 13 to 15 on worries about the economy’s health and inflation, the market stabilized early last week, then began a pattern of rallying one day and falling the next.
The Dow slid 115.05 points Wednesday, soared 206.24 points Thursday, and lost 60.89 points Friday.
Worried investors took some solace Monday in takeovers that suggested corporate executives saw value in the stock market. In the day’s biggest deal, Valero Energy agreed to buy rival Premcor for $6.9 billion, to create the nation’s largest oil refiner.
Some analysts said investors might be growing more confident about corporate earnings, in the wake of some strong first-quarter reports last week.
“The reality is that corporate profit growth is still in good shape,” said Jeff Thomas, who oversees $16 billion as chief investment officer at Atlantic Trust Group in Boston.
Among broader indexes, the Standard & Poor’s 500 rose 9.98 points, or 0.9%, to 1,162.10 after losing 7.83 points Friday.
The Nasdaq composite had a tougher time rebounding. The tech-heavy index rallied 18.59 points, or 1%, to 1,950.78; it had slumped 30.22 points Friday.
Rising stocks outnumbered losers by more than 2 to 1 on the New York Stock Exchange, but winners held a narrower margin on Nasdaq. NYSE trading volume was the lowest in two weeks.
In commodities trading, near-term oil futures fell 82 cents to $54.57 a barrel in New York.
In the bond market, the yield on the benchmark 10-year Treasury note was unchanged from Friday, at 4.25%.
Among the day’s highlights:
* Energy stocks were broadly higher on the Valero-Premcor deal. Valero rose 83 cents to $75.87; Premcor jumped $10.70 to $69.70. Among other energy shares, Amerada Hess gained $2.46 to $98.08 and Berry Petroleum added $2.07 to $49.87.
* Some Internet-related shares rallied after DoubleClick, a Net marketing-services firm, agreed to be acquired by buyout firm Hellman & Friedman for $1.1 billion. DoubleClick lost 45 cents to $8.12 after soaring last week on rumors of a deal. Elsewhere in the sector, Google rose $7.72 to a record $223.53; Monster Worldwide was up $1.75 to $25.95.
* Homebuilders’ shares gained after the National Assn. of Realtors said sales of previously owned homes in March were the third-highest on record, allaying concerns about a housing slowdown. Toll Bros. soared $2.86 to $75.36; KB Home jumped $3.76 to $112.96.
* The Dow utility stock index neared its recent four-year high, adding 3.20 points, or 0.9%, to 369.55. The closing high was 369.84 on April 12.
* Investors returned to some battered emerging markets. Mexico’s main stock index zoomed 381.78 points, or 3.2%, to 12,377.10, the biggest one-day gain in more than two years. Brazil’s main index rose 1.9%.
