US stocks closed higher on Tuesday, with the Dow Jones industrials setting another record high after news of unexpected growth in manufacturing and a surprise $5 billion bid for Dow Jones & Co Inc by Rupert Murdoch's News Corp.
The offer for the publisher of The Wall Street Journal, which sent Dow Jones shares surging more than 54 percent, was the latest in a wave of take-over proposals, suggesting to some that there was still some value left in the market.
Big-cap manufacturers, including Honeywell and Caterpillar, traded higher following data from the Institute for Supply Management showing national factory activity in April rose to the highest in nearly a year and above economists' median forecast.
The bid for Dow Jones could have implications for the whole market. "People may think there are other corporations that are that undervalued," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco.
The Dow Jones industrial average was up 73.23 points, or 0.56 percent, at 13,136.14. The Standard & Poor's 500 Index was up 3.93 points, or 0.27 percent, at 1,486.30. The Nasdaq Composite Index was up 6.44 points, or 0.26 percent, at 2,531.53.
News Corp's estimated $5 billion bid for Dow Jones, the publisher of The Wall Street Journal, sent Dow Jones shares soaring 54.69 percent to $56.20. News Corp shares were down 4.2 percent to $21.45.
"The Dow Jones deal could have broader implications in the sense that the stock was that undervalued and that they had to bid it up 20 points," Clark said. "People may think there are other corporations that are that undervalued." Other media stocks shot up on news of the Dow Jones bid. Gannett Inc, the publisher of USAToday, rose nearly 2 percent to $58.17. Shares of New York Times Co gained 5 percent to $24.58 and McClatchy Co Holdings stock gained 2 percent to $29.48.
In other deal news, Microsoft Corp, the world's largest software maker, has emerged as a contender to buy Internet advertising firm 24/7 Real Media Inc, the New York Post reported on its Web site. Shares of 24/7 Real Media jumped 20.3 percent to $11.97 while Microsoft shares were up 1.54 percent to $30.40. Data before the opening bell showed the ISM index rose to 54.7 in April from 50.9 in March, topping economists estimates of 51.0.
"The ISM number is the first stronger economic number we've gotten in a while and the fears were that the economy slowed down quite a bit," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco. "Even though earnings have been pretty good, this should give people encouragement that there is still room for them to grow."
Shares of diversified manufacturer Honeywell International Inc were up 1.66 percent to $55.08 and heavy equipment maker Caterpillar Inc gained 0.9 percent to $73.24. Procter & Gamble Co, whose products range from Gillette razors to Pampers diapers, was the biggest drag on the blue chip Dow industrials after its outlook disappointed investors.
P&G shares fell 2.24 percent to $62.96. Trading was active on the NYSE, with about 1.78 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.39 billion shares traded, above last year's daily average of 2.02 billion. Advancing stocks outnumbered declining ones by a ratio of about 6 to 5 on the NYSE. On Nasdaq, decliners and advancers were nearly matched.