Markets & Finance

Stocks End Higher on Merger News


News of more deals helped send the major indexes up, as investors await the Fed's statement on interest rates

Stocks gained ground Tuesday, thanks to more merger news. The Federal Reserve kicked off a two-day policy meeting in which rates are unlikely to be changed, while the focus will be on any shifts in bias for future moves, says Standard & Poor's Equity Research.

The Dow Jones industrial average rose 61.93 points, or 0.51%, to 12,288.1. The broader Standard & Poor's 500 index was up 8.88 points, or 0.63%, to 1,410.94. The tech-heavy Nasdaq composite gained 13.8 points, or 0.58%, to 2,408.21.

An announcement from the Fed about interest rates will come around 2:15 pm ET Wednesday. Action Economics expects policymakers to recraft the statement, but does not see a significant change in tone. "The Fed is now widely seen maintaining a hawkish bias given the lack of improvement on inflation," Action Economics.

In economic news Tuesday, housing starts rebounded 9% to a 1.525 million rate in February, vs. a revised slightly lower to 1.399 million pace in January. That recovered more than half the 14.3% decline in January. Permits fell 2.5% to 1.532 million, compared to an upwardly revised 1.571 million rate in January. Housing completions dropped 9.4% given still bad weather in February.

In merger news Tuesday, there was confirmation of Barclays (BCS) and ABN Amro Holding (ABN) having merger talks.

Affiliated Computer Services (ACS) jumped after the company announced that Darwin Deason, founder and chairman of the company, and Cerberus Capital Management submitted a proposal to acquire ACS for cash purchase price of $59.25 per share, for a total transaction value about $8.2 billion.

Apollo Management is believed to be the only private equity firm left in the bidding for Claire's Stores (CLE), but there is no guarantee that a deal will be concluded, according to Women's Wear Daily.

Among other headlines, AIG (AIG) is rumored to be mulling a bid for Prudential of the UK. Nike (NKE) is reportedly considering a bid for Germany's Adidas. In tech, Palm (PALM) is considered to be a takeover target of Nokia (NOK).

In the subprime mortgage area, Accedited Home Lenders (LEND) says it has received commitment for a $200 million term loan from one or more entities managed by Farallon Capital Management. The loan has a 5-year term and interest rate of 13% per year. Yesterday, the shares skidded after it received notice from NASDAQ that its stock is subject to delisting from NASDAQ.

In the energy markets, April NYMEX crude was up 14 cents at $56.73 a barrel. Prices were steady as the contract expires today, says Action Economics.

European stock markets moved up, erasing earlier declines Tuesday. In London, the FTSE-100 index gained 30.9 points, or 0.5%, to 6,220.3. Germany's DAX index rose 28.88 points, or 0.43%, to 6,700.29. In Paris, the CAC 40 index was up 44.32 points, or 0.81%, to 5,503.27.

Asian markets finished higher Tuesday. In Japan, the Nikkei 225 index rose 153.65 points, or 0.9%, to 17,163.2 after the Bank of Japan left interest rates unchanged. In Hong Kong, the Hang Seng index gained 90.16 points, or 0.47%, to 19,356.9.

Treasury Market

Treasury prices rose after news of the surge in housing starts, though this was partly offset by a revision slightly lower in January and the decline in February permits. The benchmark 10-year note yield fell to 4.547%.


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