Dow Climbs to New Record Close

Buying was inspired by strong factory orders, strong earnings, and more deals

A strong report on factory orders, along with positive earnings and brisk merger and acquisition activity, helped boost stocks on Wednesday, and push the Dow Jones industrial average to another record close.

The Dow Jones industrial average rose 75.74 points, or 0.58, to a new closing high of 13,211.88 -- led by General Motors (GM), DuPont (DD) and Verizon (VZ). The broader S&P 500 index added 9.62 points, or 0.65%, to 1,495.92. The tech-heavy Nasdaq Composite index climbed 26.31 points, or 1.04%, to 2,557.84.

The rally could be extended if there are favorable readings from tomorrow's productivity index and ISM services index, and Friday's nonfarm payrolls data, says Standard & Poor's.

Thursday's release of the April ISM non-manufacturing index is expected to rebound to 53.1 from the weaker-than-expected level of 52.4 in March -- the lowest reading since April 2003, says Action Economics.

And first-quarter nonfarm productivity growth is expected to be up 0.8% following the 1.6% revised gain reported for the fourth quarter.

In economic news Wednesday, U.S. factory orders rose 3.1% in March, after an upwardly revised 1.4% increase in February (1.0% previously) -- stronger than expected. Factory shipments rebounded 1.5% after declines in January and February, suggesting poor weather was a factor behind the weakness at the start of the year, says Action Economics. Inventories rose 0.2%.

ADP reported private payrolls rose 64,000 in April, which was much softer than expected and the smallest increase since July 2004. March was revised lower to 98,000 from 106,000. The April number translates into about a 90,000 rise in nonfarm payrolls when adding back some government workers, says Action Economics.

Among stocks on the move, Dow Jones & Co. (DJ) shares fell slightly as controlling shareholders, the Bancroft family, said they would vote shares constituting slightly more than 50% of the voting power outstanding against News Corp's (NWS) $60 per share offer, according to the Wall Street Journal. A Dow Jones board meeting was scheduled for today.

Cablevision Systems' (CVC) founding family, the Dolans, said they reached a deal to take the cable operator private for around $10 billion. The board rejected two earlier offers by the family as inadequate, reported the Wall Street Journal.

Citigroup (C) agreed to buy Bisys Group (BSG), a financial-services outsourcing company, for $1.45 billion, or $11.85 per share.

In earnings news, Time Warner (TWX) posted first-quarter EPS (before discontinued operations, cumulative effect of accounting change) of 30 cents, vs. 26 cents a year ago, on a 9.2% revenue rise. The media giant sees $1.05 2007 EPS before discontinued operations and cumulative effect of accounting change.

Yum Brands (YUM) jumped 5.7% after the company reported strong first-quarter profits and raised its 2007 EPS outlook.

Sprint Nextel (S) swung to loss on flat net operating revenue, amid higher operating expenses. It still sees $41-$42 billion for 2007 consolidated operating revenue and $7.2 billion in capital spending.

In the energy markets, June NYMEX crude oil was down 62 cents to $63.78 a barrel after the inventory data came in close to forecasts. Crude supplies rose by 1.1 million barrels, while gasoline supplies slipped by 1.1 million barrels. Earlier, OPEC President Mohamed al-Hamli said that the cartel would not meet before September because the market is currently "well-supplied," reports Action Economics.

European stock markets finished higher Wednesday. In London, the FTSE-100 index rose 1.01% to 6,484.5. Germany's DAX index was up 0.64% to 7,455.93. In Paris, the CAC 40 index added 0.5% to 5,990.13.

Asian markets also moved up. In Japan, the Nikkei index rose 0.69% to 17,394.92. In Hong Kong, the Hang Seng index added 0.34% to 20,388.49. In China, the Shanghai Composite Index jumped 2.17% to 3,841.27.

Treasury Market

Treasury yields rose in the wake of the better than expected surge in factory orders, which was compounded by an upward revision the month prior, says Action Economics. The benchmark 10-year yield had slumped in the wake of the damp ADP employment gain, but found traction near 4.63% and rebounded to 4.646% as stocks snapped higher, says Action Economics.

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