Deals Drive U.S. Stocks; New Record in Gold

Mukesh Buch
03 Nov, 2009
New York City

U.S. stocks gained after two large deals supported trading in stocks. Railroad and industrial stocks closed higher after Burlington and Black & Decker agreed to be acquired. Gold surged to a record after the Reserve Bank of India acquired 200 tons from the IMF.

[R]5:30 PM New York, 10:30 PM London, 3:30 AM Sydney – U.S. stocks gained after two large deals supported trading in stocks. Railroad and industrial stocks closed higher after Burlington and Black & Decker agreed to be acquired. Gold surged to a record after the Reserve Bank of India acquired 200 million tons from the IMF.[/R]

Burlington Northern Santa Fe agreed to be acquired by Warren Buffett controlled Berkshire Hathaway that values the railroad operator at $44 billion. Berkshire will pay $100 a share in cash and stock, 31% premium. The deal appears to take into account higher oil prices.

U.S. stocks wavered as banks declined after Switzerland based UBS reported wider quarterly loss. The two large deals lifted trading sentiment in New York but markets in Europe closed lower. Stanley Works agreed to acquire the Black & Decker for $3.5 billion.

Banks in London traded lower after Royal Bank of Scotland and Lloyds Banking Group agreed to tighter bailout conditions in exchange of £31 billion.

Banks were under pressure in the European trading after UBS reported its quarterly loss in a row and UK offered its second bailout. Banks in France, Germany, UK and Spain fell. BMW declined after quarterly net plunged 74%.

Australia increased its key lending rate second time by 25 basis points in as many months as the Reserve Bank focuses its attention on inflation. Treasurer Wayne Swan comments suggested that rates may rise again next year.

North American Markets

Dow Jones Industrial Average decreased 17.53 or 0.2% to a close of 9,771.91, S&P 500 Index added 2.53 or 0.3% to 1,045.41, and Nasdaq Composite Index added 8.12 or 0.4% to close at 2,057.32. Toronto TSX Composite Index increased 128.67 or 1.2% to 11,007.02.

Of the stocks in S&P 500 index, 311 increased, 185 declined and 4 were unchanged.

Novellus Systems, Inc led the decliners in the S&P 500 index with a loss of 5.2% followed by losses in Vulcan Materials of 4.4%, in KLA Tencor Corp of 3.5%, in Applied Material of 3.3% and in Expeditors International of Washington, Inc of 2.9%.

Black & Decker led gainers in the S&P 500 index with a rise of 31% followed by gains in Burlington Northern Santa Fe Corporation 28%, in AIG of 14.3%, in Stanley Works of 10% and in Cognizant Technology Solutions Corporation of 8.2%.

South American Markets Indexes

Mexico Bolsa Index increased 240.50 or 0.8% to 28,886.53 and Brazil Bovespa Stock Index surged 1,097.73 or 1.8% to 62,643.23.

Argentina Merval Index increased 2.8% and Chile Stock Market Select index inclined 0.2% and Colombia IGBC General Index decreased 1.4% and Peru Lima General Index added 0.6%.

Europe Markets Review

In London FTSE 100 Index closed lower 60.00 or 1.18% to 5,044.50, in Paris CAC 40 Index decreased 35.96 or 0.99% to close at 3,603.50, in Frankfurt DAX Index lower 37.77 or 0.70% to close at 5,393.05. In Zurich trading SMI decreased 61.11 or 0.97% to close at 6,230.11.

Asian Markets Review

Hang Seng index in Hong Kong decreased 380.13 or 1.76% to 21,240.06, and CSI 300 index in China higher 42.62 or 1.26% to 3,435.42. ASX 200 index in Australia decreased 8.90 or 0.20% to 4,531.50. The FTSE Bursa KL Composite index in Malaysia was higher 0.56 or 0.05% to 1,242.32. The markets in Tokyo were closed today.

The Kospi Index in South Korea decreased 9.17 or 0.59% to close at 1,549.92, SET index in Thailand closed lower 8.74 or 1.29% to 668.48. JSE Index in Indonesia decreased 37.54 or 1.58% to 2,334.11. The Sensex index in India decreased 491.34 or 3.09% to 15,404.94.

Commodities, Metals, and Currencies

Crude oil increased $1.26 to $79.39 a barrel for a front month contract, natural gas edged up 19 cents to $4.86 per mBtu and gasoline increased 0.64 cents to 199.67 cents.

Soybean future closed up 12.50 cents to $10.10 a bushel. Wheat futures closed down 1.00 cents in Chicago trading to $5.15 a bushel. Sugar closed up 53 cents 23.97 cents.

Gold increased $32.10 in New York trading to close at $1,086.10 per ounce, silver closed up $0.84 to $17.28 per ounce and copper for the front month delivery increased 2.90 cent to $2.97 per pound.

Dollar edged up against euro to $1.472 and edged up against the Japanese yen to 90.34.

Yield on 10-year U.S. bonds increased to 3.47% and with 30-year maturities closed higher to 4.33%.