Wall Street shares rocketed higher on Monday amid a renewed burst of merger and take-over activity as investors propelled the Dow close to the 14,000 point mark. Fresh merger and take-over news dominated the headlines and stoked stocks higher despite lingering unease about the US housing market and heightened concern about mortgage-related securities.
The Dow Jones Industrial Average leapt 92.34 points, or 0.67 percent, to finish at 13,943.42 after smashing the 14,000 barrier for the first time ever last week. The tech-heavy Nasdaq rose by comparison a slender 2.98 points, or 0.11 percent, to end at 2,690.58, giving back some of its gains from earlier in the day following concerns about technology sector earnings last week.
The broad-market Standard & Poor's 500 index jumped 7.47 points, or 0.49 percent, to a close of 1,541.57. "Wall State enjoyed a partial recovery from Friday's sell-off to begin the new week. Most of the excitement came early, on merger and earnings news," said Al Goldman, a chief market strategist at AG Edwards.
Merger and take-over activity triggered the gains amid a lack of economic news, although investors will receive fresh updates on the US housing market and second-quarter US growth in coming days, as well as a slew of corporate earnings reports.
US offshore driller Transocean Inc said it was buying GlobalSantaFe Corp in a deal that creates an estimated 53-billion-dollar offshore oil and gas drilling services giant.
Transocean is the world's largest offshore drilling contractor with a fleet of 82 mobile offshore drilling units, and GlobalSantaFe is a leading rival. Shareholders of both Houston, Texas-based companies will receive a combined 15 billion dollars in cash, to be funded through a bridge loan due one year after closing, expected by the end of the year.
Transocean's shares gained over five percent to close at 115.96 dollars while GlobalSantaFe's stock also increased over four percent to 78.33 dollars. Stocks also rose as equipment rental specialist United Rentals said it had agreed to be taken over by affiliates of the private equity group Cerberus Capital Management in a 6.6 billion dollar deal.
United Rentals said the cash deal also includes the assumption of 2.6 billion dollars in debt, but that the transaction still needs to be approved by the company's shareholders and regulators.
The company primarily rents out sturdy equipment to construction and industrial firms including utilities who require air compressors, generators, fork lifts and dump trucks among other equipment, but also serves homeowners. United Rentals shares ended up over one percent at 32.98 dollars.
In other take-over action, technology giant HP said it was acquiring data center automation group Opsware Inc, for 1.6 billion dollars. Stocks regained their upward momentum, following Friday's sharp downslide, on the take-over activity which has helped propel the Dow to record heights this year. Many of the big deals have been minted by private equity firms.
Bond prices dropped slightly as investors focused on stocks. The yield on the 10-year US Treasury bond rose a few notches to 4.964 percent from 4.956 percnt Friday and that on the 30-year bond climbed to 5.067 percent from 5.064 percent. Bond yields and prices move in opposite directions.