Wall Street stocks jumped Tuesday, pushing the Dow Jones industrials up by more than 100 points as a report that two companies are trying to buy Alcoa Inc. stoked investors’ hopes for a pickup in takeover activity.
NEW YORK (AP) — Wall Street stocks jumped Tuesday, pushing the Dow Jones industrials up by more than 100 points as a report that two companies are trying to buy Alcoa Inc. stoked investors’ hopes for a pickup in takeover activity.
Australia-based mining companies BHP Billiton Ltd. and Rio Tinto PLC are each planning to offer $40 billion for the aluminum producer, according to the Times of London.
The report came amid Hindalco Industries Ltd.’s $3.6 billion offer to buy Canadian aluminum maker Novelis Inc., and drugstore operator CVS Corp.’s bumping up the value of its proposed purchase of Caremark Rx Inc.
The flurry of takeover-related news suggested that the global economy has some muscle. Investors were also encouraged by rebounding oil prices, an upgrade of General Motors Corp., and a stock buyback by 3M.
Analysts cautioned, though, that Tuesday’s rally followed three straight days of drops in the Dow, and that recent earnings reports have been mixed. Futhermore, Federal Reserve Chairman Ben Bernanke could hint in his testimony to Congress Wednesday, as many Fed officials did last week, that rising inflation might compel policy makers to hike interest rates – a move that could hurt consumer spending.
“The optimists are lifting their heads today despite all the pessimism in the market right now,” said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. “They’re making the bet that his comments will be benign, rather than scary and hawkish.”
According to preliminary calculations, the Dow climbed 102.30, or 0.81 percent, to 12,654.85.
Broader stock indicators also rose. The Standard & Poor’s 500 index increased 10.89, or 0.76 percent, to 1,444.26, and the Nasdaq composite index rose 9.50, or 0.39 percent, to 2,459.88.
Bonds were little changed, despite the Commerce Department’s report that the trade deficit grew more than expected in December, pushing the gap to its fifth consecutive annual record in 2006. The yield on the benchmark 10-year Treasury note was at 4.81 percent Tuesday, the same as late Monday.
The dollar was mixed against other major currencies. Gold prices edged higher.
Oil prices rose $1.29 to settle at $59.06 a barrel on Tuesday after the International Energy Agency predicted a sharp rise in global demand in 2007.