Wall St gains after Pru’s deal with AIG
US STOCKS rose for a second straight day yesterday, boosted by AIG’s record-setting deal to sell a major Asian unit and on gains in semiconductor shares after SanDisk raised its revenue forecast.
Hopes for an agreement to resolve nagging uncertainty surrounding debt-laden Greece also encouraged investors.
American International Group jumped 4.4 per cent to $25.85 after Britain’s Prudential agreed to buy its AIA Group insurance arm for $35.5bn.
That and other merger and acquisition news lifted sentiment because it suggests corporate managers see purchases of other companies as a way to drive growth.
“The market always loves merger and acquisition activity because it means people or other companies are finding value out there in the market place,” said Scott Marcouiller, senior equity market strategist at Wells Fargo Advisors in St. Louis, Missouri.
SanDisk climbed 11.9 per cent to $32.63 after the flash memory maker raised its revenue forecast for the first quarter late Friday and said the outlook for the industry in the coming years is strong. The PHLX Semiconductor index added 3.1 per cent.
There were also some positive signs from the economy after disappointing data last week.
US consumer spending increased slightly faster than expected in January while the US manufacturing sector grew.
The Dow Jones industrial average gained 78.53 points, or 0.76 per cent, to 10,403.79. The Standard & Poor’s 500 Index added 11.22 points, or 1.02 per cent, to 1,115.71. The Nasdaq Composite Index rose 35.31 points, or 1.58 per cent, to 2,273.57.
Stocks have been strong recently, with the S&P 500 rising for seven of the last ten sessions.
“It’s been a pretty good mix of groups today, so you’ve had strong underlying leadership too, and the rally has been quite broad,” said Marcouiller.
The S&P 500 is now off only three per cent from a 15-month closing high reached on 19 January. It had fallen by more than eight per cent from the peak through 8 February.
Adding to yesterday’s gains were signs that Athens might be nearing a deal with European Union governments for some form of emergency aid. US-listed shares of National Bank of Greece rose 2.3 per cent to $3.95.
On the economic front, data from the Institute for Supply Management showed the US manufacturing sector grew in February.