Stocks finished higher Tuesday, as market players responded to a fresh wave of merger and acquisition news, including wireless telecom giant Cingular's winning bid for AT&T Wireless (AWE), according to Standard & Poor's MarketScope.
The tech-heavy Nasdaq composite index led the way, gaining 26.79 points, or 1.3%, to 2,080.35. The Dow Jones industrial average rose 87 points, or 0.82%, to 10,714.88. The broader Standard & Poor's 500-stock index added 11.18 points, or 0.98%, to 1,156.99.
Wireless, brokerage, and airline stocks were higher, while gold prices and related stocks rose on weakness in the U.S. dollar.
On Tuesday, Cingular, a joint venture of BellSouth (BSC) and SBC Communications (SBC), bid $41 billion, or $15 a share for AT&T Wireless, topping an offer from Vodafone (VOD). Shares of AT&T Wireless surged 16%, while BellSouth shares rose 2.8% and SBC shares fell 2.8%. Vodafone shares moved 2.9% higher after it withdrew from the bidding for AT&T Wireless. Vodafone already owns a minority stake in Verizon Wireless, with the majority held by Verizon Communications (VZ).
There were also new developments in another high-stakes takeover battle. Dow industrials member Disney (DIS) rejected Comcast's (CMCSA) hostile offer, raising the possibility of a sweetened bid by Comcast. Disney shares were somewhat lower, while Comcast shares rose 2.5%.
There was more deal news Tuesday from the financial sector. New York-based thrift Greenpoint Financial (GPT) agreed to be acquired by North Fork (NFB) in an all-stock deal valued at $6.3 billion. Greenpoint holders will receive 1.0514 North Fork shares per Greenpoint share. Greenpoint shares fell 3%.
Provident Financial (PFGI) shot up 11% after the company agreed to be acquired by rival National City (NCC) in a stock deal valued at $2.1 billion. National City shares lost 2.3%.
Meanwhile, shares of Dow component Deere (DE) rose 5% after the farm-equipment maker posted fiscal first-quarter earnings per share of 68 cents, vs. 28 cents one year earlier, on 25% higher worldwide revenues. Deere sees 18% to 20% higher sales for fiscal 2004, with net income in the $900 million to $1 billion range. Both S&P and Merrill Lynch reiterated their individual buy recommendations on the shares.
In technology, Intel (INTC) was up 2% on speculation the company will demonstrate its first chip that can run both personal computers and the most-powerful server machines.
In healthcare, First Health Group (FHCC) gained 14% after posting fourth-quarter earnings of 40 cents per share, vs. 35 cents, on a 14% revenue rise. The company still expects its 2004 revenue to be about $950 million and its EPS to be in the $1.55 range, before share repurchases.
Shares of financial-data and news group Reuters (RTRSY) surged after the company announced a small annual profit in 2003, vs. a large loss in the prior year.
Wednesday's earnings calendar is expected to feature reports from big names such as Applied Materials (AMAT) and Intuit (INTU).
In economic news Tuesday, industrial production rose 0.8% in January, up from a revised flat showing in December (was +0.1%). The median estimate was for a 0.7% gain -- including the revision, this is a just about on target. Overall capacity use climbed to 76.2% from a prior 75.6% (revised from 75.8%), while factory capacity use rose to 74.6% from 74.4%. Capacity use is up just 1% from a year ago, as of January.
Also released Tuesday: The New York Fed's Empire State index, which rose to a higher than expected 42.05 from a downwardly revised reading of 38.85 in January, which was originally 39.22.
The key economic release Wednesday is housing starts and building permits for January.
Treasuries started out higher after soft European data, but prices were pressured lower on a string of strong U.S. economic data, says Informa Global Markets. The dollar continued to move lower vs. other major currencies.
European stocks finished higher Tuesday. In London, the Financial Times-Stock Exchange 100 index, gained 53.4 points, or 1.21%, to 4,461.5 on takeover activity on both sides of the Atlantic. The pound sterling hit a 10-year high amid speculation that the Bank of England will have to raise interest rates soon to counter inflation from the strong economy.
Germany's DAX index added 25.4 points, or 0.62%, to 4,095.86 even though the ZEW consumer confidence index fell in February for the second consecutive month.
In Paris, the CAC 40 index gained 25.75 points, or 0.7%, to 3,703.82. There was little market reaction to a report that a French industrial production index rose to 100.7 in December from 100.4 in November.
Asian markets ended mixed. Japan's benchmark Nikkei 225 average rose 1.4% to 10,701.13, on hopes for strong economic growth data, with investors returning to tech shares such as Advantest that have recently been hurt by worries over the high yen.
In Hong Kong, the benchmark Hang Seng index lost 16.09 points, or 0.12%, to close at 13,815.44, moving off its 31-month high on profit-taking. Notable losers on the session included real estate concern Hang Lung and computer maker Legend.