Bulls Feast on Deals, Drive Dow to Sixth Day of Green

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Published February 07, 2011

| FOXBusiness

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Inspired by a flurry of M&A deals that underscore growing confidence in the recovery, Wall Street climbed to fresh two and-half-year highs on Monday, giving the blue chips their first six-day surge since early November. 

Today's Markets

The Dow Jones Industrial Average rose 69.48 points, or 0.57%, to 12161.63, the Standard & Poor's 500 gained 8.18 points, or 0.62%, to 1319.05 and the Nasdaq Composite jumped 14.69 points, or 0.53%, to 2783.99. The FOX 50 picked up 6.90 points, or 0.74%, to 939.99.

The red-hot markets continue to mount their offensive, largely shrugging off continued political uncertainty in the Middle East and consistently disappointing monthly labor reports. The latest rally left the blue chips in territory unseen since June 2008 -- three months before the implosion of Lehman Brothers that rocked the global economy.

The bulls on Wall Street used a slew of acquisition announcements, including the $7.3 billion takeover of Pride International (PDE), to fuel Monday's buying binge.

“I think the market is starting to run momentum to new highs,” said Nick Kalivas, vice president of financial research at MF Global. “It’s just kind of feeding on itself higher.”

Most of the Dow's 30 stocks closed in the green, driven by financial giants American Express (AXP) and Bank of America (BAC). The weakest links from the index, were Pfizer (PFE) and Kraft (KFT). 

Tech stocks such as Apple (AAPL) and Dell (DELL) helped push the Nasdaq to its highest settle since November 2007.

The gains come after the Dow rallied 260 points last week -- its ninth weekly gain of the past 10 -- and the Nasdaq leaped 3.07% for its best week since June 2010.

Without any major economic or earnings reports to use for guidance, much of the focus was on a trio of acquisitions announced on Monday: Danaher (DHR)scooped up medical diagnostics company Beckman Coulter (BEC) for about $6.8 billion, oil driller Ensco (ESV) bought rival Pride International for $7.3 billion and AOL (AOL) will swallow The Huffington Post for $315 million.

Wall Street typically cheers strategic acquisitions such as the ones unveiled already this week because it often leads to more deals and shows companies are confident enough about the economy to shell out the big bucks. 

Monday's rally underscores Wall Street's ability to continue to shrug off the turmoil in Egypt. Fears that the chaos there would spill over into oil-producing nations like Saudi Arabia or cause the closure of the crucial Suez Canal have still not been realized, relieving the bulls in the markets. 

In a clear sign of the receding worries, crude oil, which relies on the Suez Canal for transport out of the Middle East, backed away from its crisis highs for the fourth day of the last five. Crude settled at $87.48 a barrel, down $1.55, or 1.74%. Gold gained 70 cents a troy ounce, or 0.05%, to $1,347.60.

In the only noteworthy piece of economic data on the agenda, the Federal Reserve said U.S. consumer credit jumped by $6.1 billion in December -- nearly tripling forecasts from economists for a rise of just $2.3 billion. The report is a sign consumers have been confident enough to increase their credit-card debt. 

Corporate Movers

AOL (AOL) unveiled plans to acquire online news site The Huffington Post for $315 million. As part of the deal, Arianna Huffington will become editor-in-chief of a new AOL division housing its content and The Huffington Post. AOL said it will use $300 million of cash on its balance sheet to pay for the deal. 

Danaher (DHR) acquired medical diagnostics company Beckman Coulter (BEC) for about $6.8 billion, marking a 45% premium before rumors of a potential deal began swirling. The all-cash deal places an $83.50-a-share value on Brea, Calif.-based Beckman, which makes and markets biomedical testing instrument systems, tests and supplies.

Ensco (ESV) bid $7.3 billion for rival Pride International (PDE) in a marriage that would create the second-largest offshore oil and gas driller in the world. The $41.60-a-share deal puts a 21% premium on Pride. 

News Corp.'s (NWSA) FOX network set a new all-time ratings record by drawing 111 million viewers for its coverage of Super Bowl XLV. The figures topped the 106.5 million viewers that tuned into last year's game. News Corp. is the parent of FOX Business.

Nasdaq OMX Group’s (NDAQ) Nasdaq Stock Market acknowledged a confidential document-sharing service was been hacked into, perhaps in an effort to find nonpublic inside information that could be illegally traded on. Nasdaq said it has notified its customers and is consulting with authorities.

Hasbro (HAS) beat the Street with a non-GAAP profit of $1.02, compared with forecasts for 92 cents. However, the toy maker's sales fell 7% to $1.28 billion, trailing consensus calls for $1.3 billion.

Global Markets

The U.K.'s FTSE 100 rose 0.89% to 6051.03, Germany's DAX gained 0.93% to 7283.62 and France's CAC 40 leaped 1.08% to 4090.80.

In Asia, Japan's Nikkei 225 advanced 0.46% to 10592, Hong Kong's Hang Seng slumped 1.49% and China's Shanghai Composite closed up 0.30% to 2798.96.. 

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http://www.foxbusiness.com/markets/2011/02/05/futures-tick-higher/