Stocks Rise as Buffett Eyes M&A; Oil Falls, Dollar Index Drops
U.S. stocks rallied, extending a third monthly gain, as billionaire investor Warren Buffett said he’s looking to make acquisitions and reports signaled a strengthening American economy. Oil retreated as Saudi Arabia offered to make up for lost output in Libya. The dollar slid.
The S&P 500 advanced 0.6 percent to 1,327.22 at 4 p.m. in New York and rose 3.2 percent in February. The Stoxx Europe 600 Index rose 0.8 percent. The Dollar Index lost 0.5 percent to 76.898, the lowest level since Nov. 5, while the yield on 10- year Treasuries rose less than one basis point to 3.42 percent. Crude fell 0.9 percent to $96.97 a barrel. Oman shares sank the most in 25 months as political unrest spread to the Sultanate. Dubai’s index slid to the lowest level since 2004.
The S&P 500 rebounded after last week’s 1.7 percent drop after Buffett told shareholders his “trigger finger is itchy” for deals, spurring speculation that an upswing in takeovers will accelerate. Blackstone Group LP agreed to buy Centro Properties Group’s U.S. shopping centers for $9.4 billion, two people familiar with the matter said, while Ventas Inc. plans to buy Nationwide Health Properties Inc. for about $5.7 billion in a record takeover for health-care real-estate investment trusts.
“It’s a constructive environment,” said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $741 billion. “Whenever Warren Buffett’s talking about putting money to work, that’s going to have a positive impact on people’s views and on the market.”
Buffett isn’t the only investor with an itchy trigger finger. Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion through this date last year, according to data compiled by Bloomberg.
Class B shares of Buffett’s Berkshire Hathaway Inc. climbed 2.8 percent as the company also reported a 43 percent gain in quarterly profit to the highest since 2007 on derivative gains and earnings from the acquisition of Burlington Northern Santa Fe, the railroad purchased last year.
“Our elephant gun has been reloaded, and my trigger finger is itchy,” Buffett said of the outlook for deals in his annual letter to shareholders on Feb. 26. The company’s cash holdings rose to $38.2 billion at year-end, the highest in three years, compared with $34.5 billion as of Sept. 30.
Nationwide Health Properties rallied 9.7 percent, the most since May 2009, while Ventas slipped 3.1 percent. Trading in Centro Properties was halted in Australia.
Stocks also gained as the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News. Separate government data showed personal incomes climbed 1 percent and inflation remained below the Fed’s long-term forecast.
Federal Reserve Bank of New York President William Dudley said in a speech in New York that the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Fed Bank of St. Louis President James Bullard said in a CNBC interview that oil prices would have to go “substantially higher” to be a concern to U.S. economic and a weaker dollar can help growth temporarily.
Fed Chairman Ben S. Bernanke will testify to the Senate Banking Committee tomorrow.
The cost of protecting U.S. corporate bonds from default dropped for a third day. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 1.2 basis points to a mid-price of 81.89 basis points, according to index administrator Markit Group Ltd.
About five shares gained for every two that fell in Europe’s Stoxx 600. Syngenta AG jumped 2.6 percent after the Indian government announced tax breaks for investments in fertilizer projects and a rival announced an increase in sales of agricultural chemicals. Siemens AG climbed 3.6 percent after the company was said to be weighing an initial public offering of its Osram lighting business. HSBC Holdings Plc, Europe’s biggest bank, slid 4.7 percent after earnings missed analysts’ estimates.
The dollar depreciated against all but three of its most- traded counterparts, slipping 0.4 percent per euro. Europe’s single currency appreciated 0.5 percent versus the yen and 0.4 percent against the Swiss franc before the European Central Bank meets to discuss interest rates this week.
Sweden’s krona jumped 1.5 percent against the dollar to the strongest since August 2008, after central bank Governor Stefan Ingves said in minutes of the Feb. 14 meeting published today that the chances of monetary tightening at every meeting this year have risen and signaled individual interest-rate increases may be bigger than those executed thus far.
The Bloomberg GCC 200 index fell 0.8 percent to the lowest level on a closing basis since Sept. 4. Oman’s MSM 30 Index sank 4.9 percent and the Dubai Financial Market General Index slid 3.8 percent
The MSCI Emerging Markets Index advanced 0.7 percent. The Bombay Stock Exchange Sensitive Index climbed 0.7 percent as India’s government pledged to trim its budget shortfall while boosting spending on projects needed to sustain economic growth.
Oil erased gains after climbing as much as 2.1 percent to $99.96. Chief Executive Officer Khalid Al-Falih said the Saudi Arabian Oil Co. is ready to compensate for any shortfall in crude supply. Most ships picking up Libyan oil cargoes have done so successfully in the past week, said Bob Knight, head of tankers at Clarkson Plc, the world’s largest shipbroker.
Brent crude also fluctuated between gains and losses, recently trading down 0.2 percent at $111.08. The average price for U.S. regular gasoline at the pump gained 2.1 cents to $3.354 a gallon on Feb. 26, AAA, the country’s largest motor club, said on its website. The record pump price, reached in July 2008, was $4.114.
Cotton jumped the daily limit of 7 cents, or 3.8 percent, after China, the world’s largest producer and consumer, reported lower production last year. Copper climbed 0.9 percent to $4.4965 a pound in New York.
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