Wall Street has a third day of gains
WALL Street stocks rose for a third day yesterday as investors saw Google’s offer for phone maker Motorola Mobility as a signal to jump back into the market after weeks of sharp selling.
Acquisition activity is often viewed as a sign major corporations sitting on big cash piles are willing to pay for shares even as economic growth remains sluggish.
Motorola Mobility Holdings jumped 55.8 per cent to $38.13 after Google offered $12.5bn to buy the company, which would be Google’s biggest deal ever. Google shares ended down 1.2 per cent at $557.23.
With yesterday’s gains, the stomach-churning losses incurred last week have now been wiped out. Among big winners were banks, which have been a frequent target for selling. Bank of America rose 7.9 per cent to $7.76, making it the Dow’s biggest percentage gainer.
“The shining point throughout this whole debacle is that corporate America is actually doing quite well,” said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco. “It shows that they’re not yet ready to throw in the towel.”
Shares of other cell phone companies also rose, riding hopes of additional takeovers or the possibility of business shifting to Google’s competitors. Blackberry maker Research in Motion advanced 10.4 per cent to $27.11 while Nokia jumped 17.4 per cent to $6.29.
The S&P financial index rose 3.2 per cent. Shares of Bank of America advanced after it said it plans to sell its credit card business in Canada to TD Bank Group.
Three days of market gains follow weeks of intense volatility and a sharp selloff that put the S&P 500 in negative territory for the year. After the rebound, the S&P is now down just 4.2 per cent on the year.
“It’s causing people to rethink their view toward the market,” said Nick Kalivas, senior equity index analyst at MF Global in Chicago.
The Dow Jones industrial average shot up 213.88 points, or 1.90 per cent, to 11,482.90. The Standard & Poor’s 500 Index gained 25.68 points, or 2.18 per cent, to 1,204.49. The Nasdaq Composite Index climbed 47.22 points, or 1.88 per cent, to 2,555.20.
A meeting today by French and German political leaders is expected to result in initiatives needed to restore confidence in credit and other markets.