News Column

Stocks Moving Notably Higher On M&A News, Housing Data - US Commentary

April 28, 2014

WASHINGTON (Alliance News) - With traders reacting positively to the latest corporate and economic news, stocks have moved notably higher in early trading on Monday. The major averages have climbed firmly into positive territory, partly offsetting the sharp pullback seen last Friday.

The major averages have seen some further upside in recent trading, reaching new highs for the young session. The Dow is up 128.42 points or 0.8% at 16,489.88, the Nasdaq is up 34.13 points or 0.8% at 4,109.69 and the S&P 500 is up 12.45 points or 0.7% at 1,875.85.

The early strength on Wall Street is partly due to news on the merger-and-acquisition front, with shares of AstraZeneca (AZN) moving sharply higher amid news that drug giant Pfizer (PFE) is seeking to renew discussions about a potential takeover of its British rival.

Pfizer noted that it previously offered to acquire AstraZeneca in a deal valued at approximately 58.8 billion pounds, or USD98.7 billion.

Susser Holdings (SUSS) and Furiex Pharmaceuticals (FURX) are also posting standout gains after agreeing to be acquired by Energy Transfer Partners (ETP) and Forest Labs (FRX), respectively. Susser is being acquired for USD1.8 billion, while Furiex is being bought for USD1.5 billion.

Positive sentiment was also generated by the recent release of a report from the National Association of Realtors showing that US pending home sales rebounded by much more than anticipated in the month of March.

NAR said its pending home sales index surged up by 3.4% to 97.4 in March after edging down by 0.5% to a revised 94.2 in February. Economists had been expecting a much more modest increase of about 0.6%.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Biotechnology and pharmaceutical stocks are moving sharply higher as a result of the M&A news, with the NYSE Arca Biotechnology Index and the NYSE Arca Pharmaceutical Index jumping by 1.7% and 1.8%, respectively.

Housing stocks are also seeing considerable strength on the heels of the pending home sales data, resulting in a 1.5% advance by the Philadelphia Housing Sector Index.

Software, tobacco, and computer hardware stocks are also seeing early strength, while gold stocks are bucking the uptrend amid a modest decrease by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index dropped by 1%, while Hong Kong'sHang Seng Index ended the day down by 0.4%.

Meanwhile, the major European markets are seeing modest strength on the day. While the UK'sFTSE 100 Index has edged up by 0.2%, the French CAC 40 Index and the German DAX Index are both up by 0.3%.

In the bond market, treasuries have come under pressure on the heels of the upbeat housing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 2,695%.

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Source: Alliance News