S&P hits two-week high on strong earnings; M&A supports : 25.10.2016
The Dow Jones industrial average rose 77.32 points, or 0.43 percent, to 18,223.03, the S&P 500 gained 10.17 points, or 0.47 percent, to 2,151.33 and the Nasdaq Composite added 52.43 points, or 1 percent, to 5,309.83.
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The S&P 500 hit a two-week high on Monday on the back of strong earnings, while a flurry of acquisitions indicated corporate America continues to see untapped value in the market. Annualised third-quarter earnings from S&P 500 components are expected to have risen 1.1 percent last quarter, following four quarters of contraction, according to Thomson Reuters I/B/E/S data. Of the 120 companies that have reported so far, 78 percent have beaten analyst expectations, above the long-term average of 63.5 percent. Microsoft, which handily beat expectations last week, rose 2.2 percent and Apple, due to report on Tuesday, rose 0.9 percent. "Consensus is earnings are going to continue to improve in part due to favourable energy prices and to strong consumption patterns here in the US," said Chad Morganlander, portfolio manager at Stifel Nicolaus in Florham Park, New Jersey. Wall Street signalled scepticism that AT&T would be allowed by regulators to purchase Time Warner Inc for a planned USD85.4 billion. Shares of both companies fell as analysts scrutinized the deal, with AT&T down 1.7 percent at USD36.86 and Time Warner Inc down 3.1 percent at USD 86.74. But competitor T-Mobile US jumped to its highest since August 2007 after it raised its forecast for customer additions for the year and said the AT&T-Time Warner deal could help T-Mobile carve out more market share. T-Mobile shares ended up 9.5 percent at USD 51.19. The Dow Jones industrial average rose 77.32 points, or 0.43 percent, to 18,223.03, the S&P 500 gained 10.17 points, or 0.47 percent, to 2,151.33 and the Nasdaq Composite added 52.43 points, or 1 percent, to 5,309.83. TD Ameritrade fell 4.4 percent to USD 35.46 after it said it would buy privately held Scottrade Financial Services in a deal valued at USD4 billion. B/E Aerospace jumped 16.4 percent to USD 58.89 after aircraft component maker Rockwell Collins said it would buy the company in a deal valued at USD 6.4 billion plus the assumption of USD 1.9 billion in debt. Rockwell was down 6.2 percent at USD 79.21. "Overall merger and acquisition activity will continue, due in part to low debt financing costs," said Stifel's Morganlander. The S&P 500 posted 18 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 110 new highs and 45 new lows. About 5.8 billion shares changed hands in US exchanges, below the 6.4 billion daily average over the last 20 sessions.
