Nasdaq Up 35, S&P500 Up 13

123jump.com Staff
04 Dec, 2006
New York City

Merger news worth more than $30 billion, 1.6% drop in oil price and investors desire to add tech stocks led three popular averages near the record level. Bank of New York agreed to buy Mellon Financial after $16.5 billion and form the largest custodian of financial assets. Bank of NY shres jumped 12% and Mellon rose 5% on the news. Agere Systems and LSI Logic agreed to merge. Pfizer lost 11% after dropping its cholesterol drug.

[R]6:00PM NY – 12:00PM Germany[/R]

Yield on 10-year bond closed at 4.431% and the 30-year bond closed at 4.540%.

Gold declined 20 cents to close at $650.70 a troy ounce, silver advanced 3 cents to end at $14.275 a troy ounce and copper increased 0.40 cents to close at 318 cents a lb.

Oil lost $1.03 to close at $62.40 a barrel and heating oil declined 3.79 cents to finish at 180.98 cents a gallon. Gasoline was down 2.05 cents to end at 166.50 cents a gallon. Natural gas decreased 64.4 cents to close at $7.778 per mBtu.

Asian markets closed mostly higher led by Singapore with a gain of 0.52%, Taiwan with an increase of 0.44% and Philippines with an advance of 0.25%. The decliners were South Korea with a decrease of 0.55%, Malaysia with a loss of 0.25% and Indonesia with a decline of 0.20%. Hong Kong finished higher on gains by Chinese banks, while Japan''s market ended lower as a strong yen hurt shares of exporters.

European markets closed higher led by Spain with a gain of 1.36%, Germany with an increase of 0.87% and France with an advance of 0.80%. European closed higher for some late-session buying connected by Pfizer didn’t drag other U.S. stocks down and on deal-making news.

Latin America markets closed higher despite a decline in oil prices. The leader was Brazil with a gain of 3.21%, Argentina with an increase of 1.47% and Mexico with an advance of 0.65%. There were no decliners.

[R]1:00PM European markets finished higher on deal-making news.[/R]
European stocks recovered on Monday to close in the positive. The regional markets advanced on deal-making news, takeover speculation, gains on Wall Street, and late-session buying on relief that Pfizer didn’t drag other U.S. stocks down. The German DAX 30 climbed 0.9%, boosted by strength in utilities stocks RWE and E.On, as well as gains for Deutsche Lufthansa. Shares in RWE rose 2.7% on a report that it''s preparing a defense strategy against a possible takeover from Gazprom or Enel. The French CAC 40 closed higher by 0.7%, supported by EADS as it rose 1.2% after it decided to proceed with the development of its A350 XWB planes. London FTSE 100 added 0.5%. A leading gainer in London was foods group RHM which surged 31.5% after rival Premier Foods said it agreed to buy RHM for 1.23 billion pounds in a deal that will create the U.K.''s biggest food producer. Elsewhere, EMI shares rose 1.5% on bid speculation of 310 pence a share from private-equity firm Permira. Despite a steep drop in Pfizer shares, most of its rival drug companies advanced, with AstraZeneca, moving higher 0.5%.

Crude oil prices dropped over $1, despite concerns over oil production cuts. Crude oil January contract fell $1.10 to $62.33 a barrel. Heating oil lost 3 cents to $18152 a gallon, while gasoline fell 2 cents $1.6685. Natural gas gained 43 cents to $7.99 per 1,000 cubic feet. London Brent dropped 62 cents to $64. The U.S. dollar gained some ground against its major currency rivals. The euro was quoted at $1.3320, down from $1.3335. The dollar bought 115.42 yen, up from 115.35. The British pound was quoted at $1.9787, down from $1.9805. European gold prices retreated, as the dollar moved up. In London, gold traded at $644.39 per troy ounce, down from $646.79. In Zurich, the precious metal traded at $642.95 per ounce, down from $645.85. Silver closed at $14.04, up from $13.95.


[R]11:30AM Lower oil and takeover news boosted market averages.[/R]
The three major market averages posted a significant strength on Monday morning, boosted by well-received merger-and-acquisition news and lower crude oil prices. The Nasdaq showed a particularly strong upward move, with the tech-heavy index rising 1% on solid gains in the semiconductor sector. Oil prices retreated from last-week highs, with a barrel of light, sweet crude falling $1.05 to $62.38 on the Nymex.

Financial stocks were among the most notable gainers in early trading, with Bank of New York ((BK)) and Mellon Financial ((MEL)) posting solid gains on news that Bank of New York agreed to acquire Mellon for $16.5 billion in stock. Significant strength also emerged in the airline sector, with the oil-sensitive sector benefiting from the oil price decline. Outside the sector, Station Casinos Inc. ((STN)) soared 18% after an investor group led by the company''s chairman offered to take the company private in a deal worth $4.65 B.

At the same time, the decrease by the price of oil contributed to some weakness among energy stocks. Dow component Pfizer ((PFE)) weighed on the blue-chip index, continuing to buck the upward trend by the broader market. The drugmaker dropped 11% on news that it halted the development of a key new cholesterol treatment. The Dow Jones industrial average rose 36.05, or 0.30%, to 12,230.18. The Standard & Poor''s 500 index was up 5.64, or 0.40%, to 1,402.35, and the Nasdaq composite index added 24.10, or 1.00%, to 2,437.31. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.44% from 4.43% late Friday.


[R]10:30AM The Sensex closed with a slight gain Monday on auto and metal stocks.[/R]
The Sensex on BSE finished 29.55 points, or 0.21% higher, at 13874.33, an all-time closing high. The market breadth was strong as 1,462 shares advanced on BSE, compared to 1,090 that declined and 81 shares remaining unchanged. From the Sensex stocks, 16 advanced while the rest declined. The turnover on BSE was Rs 4,808 crore lifted by two block deals of 20.09 lakh shares each made in ICICI Bank stock in the institutional segment at an average rate of Rs 884 per share. The turnover on BSE on Friday was Rs 4,451 crore. The turnover on NSE was Rs 8,855 crore, higher than Rs 8,200.29 crore on Friday.

Economic news

India is hoping to resolve through dialogue a trade dispute with the European Union over high import tariffs, its commerce minister said on Monday after a meeting with his visiting French counterpart.

Most active

Parsvnath was the most-active stock with a turnover of Rs 302 crore followed by Era Constructions, Unitech, Action Construction and Bajaj Hindustan.

Advancers

Tata Motors led the gainers, up 3.64% to Rs 873.55 on 7.02 lakh shares. It had surged to an intra-day high of Rs 887.20. Tata Motors vehicle sales advanced 43% in November compared with the same month a year ago. Sales of commercial vehicles rose 46% while sales of cars rose 48%.

Reliance Energy gained 3.30% to Rs 558, NTPC was up 2.67% to Rs 152 and BHEL advanced 2.53% to Rs 2,584. Cement maker ACC rose 3.25% to Rs 1,169 as investors bet that the recent cut in diesel and petrol prices will bring down transportation costs for cement firms. L&T added 3.24% to Rs 1,423.55 on reports that the company is planning to enter into arms and ammunition to widen its defense equipment portfolio.

Index heavy Reliance Industries gained 0.24% to Rs 1,264 on 5.62 lakh shares. The company has restarted a fire-damaged hydrotreater unit at its Jamnagar refinery in Gujarat on December 1st. Mahindra & Mahindra rose 0.42% to Rs 744 after its total automotive sales for November rose 11.5%. Its tractor sales rose 12.4%.

Sugar stocks rallied on reports that Indonesia will buy as much as 2,00,000 tonnes of white sugar by March 2007 to ensure supplies to keep a check on prices and control inflation. Bajaj Hindustan was up 4.51% to Rs 247, Balrampur Chini Mills rose 9.34% to Rs 89, Bannari Amman Sugars added 1.56% to Rs 810, Dhampur Sugar Mills gained 12.10% to Rs 95.40, Oudh Sugar Mills was up 8.50% to Rs 103.35, Mawana Sugar moved 5.46% higher to Rs 56.95, Shree Renuka Sugar spurted 6.96% to Rs 532, Sakthi Sugar surged 13.06% to Rs 116 and Triveni Engineering jumped 4.43% to Rs 58.90.

Sterlite Industries rose 5.12% to Rs 586.25 after the company said on Monday it has commissioned an aluminium smelter with an annual production capacity of 2,45,000 tonnes.

Decliners

HDFC Bank led the decliners, off 1.84% to Rs 1,100 on 2.66 lakh shares of which 2.40 lakh shares came through a block deal which was executed at Rs 1,100 per share on BSE. Wipro lost 1.77% to Rs 590.25, Hero Honda plunged 1.51% to Rs 760 and Satyam Computers shed 1.47% to Rs 460.

Tata Steel Ltd fell 0.1% to Rs 467.80 after the company and Nippon Yasen Kabushiki Kaisha entered into a joint venture agreement for setting up a shipping company to cater to dry bulk and break bulk cargo.


[R]9:45AM Stocks opened higher, helped by merger activity.[/R]
U.S. market averages started trading higher Monday morning, despite a steep decline by the shares of Pfizer. The drugmaker''s decision to halt development of a key drug generated negative sentiment in pre-opening hours, but series of takeover deals managed to offset the negative mood.

Drug makers were in the spotlight after Pfizer ((PFE)) pulled its cholesterol drug because of cardiovascular problems it causes to users. Shares of the company tumbled 14.8% to $23.75. In contrast, rivals Merck & Co. ((MRK)) and Schering-Plough Corp. ((SPG)) gained as their cholesterol drug was seen thriving with competition eliminated.

Financial shares were also in focus, helping the market to overcome the earlier weakness. Shares of Bank of New York ((BK)) jumped 8.8% after it agreed to takeover Mellon Financial which rose 4%. The transaction will create the world''s leading asset custodian with $16.6 trillion in assets. Further in the deal news, Chipmaker LSI Logic ((LSI)) fell 12% after it agreed to buy Agere Systems in an all-stock deal worth around $4 billion.

Some strength also emerged in the healthcare provider sector, with Lincare ((LNCR)), Omnicare ((OCR)) and Tenet ((THC)) turning in some of the sector''s best performances, each rising about 2%. Various other sectors posted strength, with some retail, health insurance, and utilities stocks posting significant gains. Strength in the internet sector contributed to a notable upward move by the tech-heavy Nasdaq. In the first hour of trading, the Dow Jones industrial average rose 31.00, or 0.25%, to 12,225.13. The Standard & Poor''s 500 index was up 4.40, or 0.32%, to 1,401.11, and the Nasdaq composite index added 13.12, or 0.54%, to 2,426.33. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.45% from 4.43% late Friday.


[R]9:30AM London advances in early trading Monday supported by merger deals.[/R]
The FTSE 100 rose 8.8 points, or 0.1%, at 6,029.7 at mid-day on Monday.

Advancers

Shares in RHM, which makes Mr Kipling cakes and Hovis bread, leapt 30.6% on the news, which will create the biggest food producer in Britain. Premier Foods gained 3.4%, and jumping on the bandwagon, Northern Foods rose 3.9% and Cadbury Schweppes gained 1.9%.

Cairn Energy added a further 2.1% following Friday strong run on continued speculation that Indian partner, ONGC, could be eyeing a move for Cairn assets in Rajasthan.

AstraZeneca rose 1.4% after US rival Pfizer halted development of its experimental drug Torcetrapib due to safety concerns.

Telecoms group Vodafone Group traded 1.3% higher after Credit Suisse upgraded the stock from neutral to outperform.

In the mid-caps, Aberdeen Asset Management rose 1.7% after it said full-year pre-tax profits increased to 79 million pounds.

Decliners

The only decliners in early trading was BAE Systems losing 2.3% amid continued concerns over its multi-billion pound contacts to supply fighter jet to Saudi Arabia.


[R]9:00AM Stocks futures pointed lower, hurt by weakness in Pfizer shares.[/R]
U.S. stock futures declined, hurt by weakness in Pfizer shares which overshadowed a multibillion-dollar deal in the financial sector. Pfizer ((PFE)) dropped 14% in pre-market trading as the drugmaker said it halted the development of cholesterol drug torcetrapib because of deaths and cardiovascular problems in patients using it. Following the news, the drugmaker was downgraded by Leman Brothers, citing concerns that revenue growth may not return for the next seven years. Bank stocks were also in focus after Bank of New York ((BK)) agreed to buy Mellon Financial ((MEL)) to become the world''s largest financial assets service company. In other merger-and-acquisition news, chipmaker LSI Logic Corp. ((LSI)) said it agreed to buy Agere Systems Inc. ((AGR)) in an all-stock deal worth around $4 billion. Agere shares shot up 19% to $21.09 ahead of the open. Station Casino shares ((STN)) climbed 17% in pre-open trading after the casino operator said it received an $82-a-share buyout bid from Fertitta Colony Partners LLC, representing a 19% premium to Friday''s closing price of $69.10. S&P 500 futures fell 1.40 points to 1,399.00 and Nasdaq 100 futures dipped 0.75 points to 1,781.25. Dow industrial futures shed 12 points to 12,212.


[R]8:00AM The Bank of New York agreed to buy Mellon Financial for $16.5 B.[/R]
The Bank of New York ((BK)) announced on Monday it agreed to take over Mellon Financial Corp. ((MEL)) in a $16.5 billion all-stock deal. The combined company will be the world''s biggest asset custodian and corporate trustee with $16.6 trillion in assets under custody and $8 billion in assets under trusteeship. It will also be a top ten global asset manager with $1.1 trillion of assets under management. The company will rank as the 11th largest financial institution in the U.S. The new company will be called Bank of New York Mellon Corp.

Under the terms of agreement, Bank of New York''s shareholders will receive 0.9434 shares in the new company for each share of Bank of New York that they own, and Mellon shareholders will receive one share in the new company for each Mellon share they own. Bank of New York and Mellon entered into mutual stock option agreements for 19.9%.of the issuer''s outstanding common stock.

The companies said the deal will allow the combined group to invest and expand more rapidly than its competitors. They expect to reduce total pre-tax costs by around $700 million a year, equivalent to roughly 8.5% of the estimated combined expense base in 2006. The deal is expected to complete in Q3 of 2007 and will result in restructuring charges of around $1.3 billion. 3,900 of its 40,000 combined jobs will be cut within three years.


[R]7:30AM Asian stocks closed mixed on Monday, with the Japan down and HK up.[/R]
Asian markets ended mixed on Monday. Japan''s benchmark Nikkei 225 stock index fell 0.11%, to finish at 16303.59. Shares of Canon fell as much 1.2%. Consumer electronics conglomerate Matsushita slipped 1.3%. Among Japanese auto makers, which rely on the U.S. export market, Nissan Motor lost 1.4%, while shares of Nippon Steel rose 1.3% on reports the group will consider a cross-shareholding arrangement from Baosteel Group Corp of China.

In Hong Kong, strength in Chinese banks and laggard blue chips helped the Hang Seng Index edge higher. The Hang Seng Index rose 0.1% to 18702.73. China Construction Bank, which has the third-largest weighting in the benchmark index, rose 1% and China Merchants Bank gained 3.1%. Shares of China Mobile shed 0.8% while fellow index heavy HSBC Holdings fell 0.4%.

In South Korea, shares fell on U.S. market losses as disappointing U.S. economic data released late Friday sent the Korean won to more than a nine-year high. The Korea Composite Stock Price Index, or Kospi, fell 0.6% to 1426.46. LG.Philips LCD declined 2.6%, due to concerns over earnings in the first half of next year.

Taiwan shares rose for the fourth session in row to a new six-year high. The Weighted Price Index of the Taiwan Stock Exchange rose 0.4% to close at 7647.01. Australia''s S&P ASX/200 fell 0.1% after data released Monday showed Australian new home building approvals fell 7.4% in October, exceeding the 2% decline economists had expected. Australia''s Woodside Petroleum traded flat.

Shanghai Composite Index in China climbed to a five-year high after official media reported that the government will encourage financial institutions to invest more heavily in shares. The Shanghai Composite rose 2.8% to 2161.65, its highest close since July 23, 2001. Singapore Straits Times Index rose 0.5%, Malaysia KLSE Composite shed 0.3% and New Zealand NZX-50 index ended down 0.5% and Indonesia Jakarta Composite fell 0.2%.


[R]6:30AM European markets gained a little on Monday on bid speculation.[/R]
European markets were higher on Monday. By mid morning, FTSE 100 in London climbed 0.5% to 6,049.8, Frankfurt Xetra Dax added 0.4% to 6,268.05, and the CAC 40 in Paris gained 0.4% to 5,272.54.

Advancers

Shares in Alstom gained 2.4%, while Bouygues added 0.3%. Spanish construction company FCC gained 2.4% after domestic rival Acciona said it had agreed to sell its 15.1% stake in FCC to property group Inmocaral. Inmocaral jumped 5.1%. Acciona shares were flat.

Endesa, meanwhile, along with rival Spanish electricity groups Iberdrola and Union Fenosa, gained after the government said it planned to raise electricity tariffs by an average 10 %, Endesa gained 0.6%, Iberdrola added 0.7% and Union Fenosa climbed 1.1%.

Eon, the German utility whose bid for Endesa could potentially be blocked by Acciona, climbed 0.4%. AstraZeneca, whose rival treatment Crestor is among its biggest growth drivers, gained 1.1%, while Roche, the Swiss group which is developing a new cholesterol drug, added 0.3%.

Decliners

The German-listed pharma company Pfizer fell as much as 12% after the company ended development of a new cholesterol drug, which had been tipped to be its next blockbuster.

Oil and gold

Oil prices gained slightly Monday as fresh comments from key OPEC members over the weekend suggested the oil cartel would push for further cuts in output at its next meeting later this month. Light, sweet crude oil for January delivery rose 2 cents to $63.45 a barrel in electronic trading on the NYME.

Gold traded at $640.66 an ounce Monday, down $5.74 an ounce from the close of $646.40 on Friday.

Currencies

After rising to a 20-month high around $1.3370 in early trade, the euro pared gains to stand at $1.3325, slightly down on the day. The British pound pulled away from a 14-year high of $1.9849 hit on Friday to stand at $1.9790. The dollar was up slightly at 115.55 Japanese yen but stayed in sight of a four-month low of 114.97 yen on Friday.