Secret behind US markets' rise
by vinod ssssss on May 05, 2007 12:39 PM
Stock prices rose moderately yesterday, carving out their fourth straight weekly gain amid a fresh round of corporate takeover news and employment figures that largely met expectations.
Reports that Microsoft renewed talks to acquire or invest in Yahoo helped buoy investor sentiment as did word that the Reuters Group received a preliminary takeover offer. There is speculation that Thomson, the provider of financial data, is the likely suitor for Reuters, the British news and information company.
Beyond the buyout news, which has figured prominently in shaping Wall Street%u2019s largely upbeat mood in recent months, economic data offered some nuggets for both bullish and bearish investors. The Labor Department said the nation%u2019s jobless rate rose to 4.5 percent in April as expected; in March, the rate had reached a five-year low of 4.4 percent.
%u201CThe economic data suggest that the economy is not tanking and inflation is not accelerating and that the Fed is not going to upset the apple cart,%u201D said Alan Levenson, chief economist at T. Rowe Price.
The Dow Jones industrial average rose 23.24 points, or 0.18 percent, to 13,264.62, its fourth straight record close. The Dow also reached a new intraday high of 13,284.53.
The Dow has set 19 record closes since the start of the year, and 41 since the beginning of October.
Broader indicators also moved higher yesterday. The Standard & Poor%u2019s 500-stock index advanced 3.23 points, or 0.21 percent, to 1,505.62. On Thursday, the S.& P. 500 moved above the 1,500 mark for the first time in nearly seven years, and it rose as high as 1,510.34 yesterday. The return to 1,500 puts the closing high of 1,527.46 %u2014 reached March 24, 2000 %u2014 within investors%u2019 sights.
The Nasdaq composite index rose 6.69 points, or 0.26 percent, to 2,572.15. While the Nasdaq has risen alongside the Dow and the S.&P. in recent sessions, it remains about halfway toward its March 2000 high.
Yesterday%u2019s advance ended another week of significant gains. The Dow was up 1.10 percent for the week, after crossing 13,200 for the first time Wednesday. It has gained 7.7 percent in the previous 25 sessions. The S.& P. 500 was up 0.77 percent for the week, while the Nasdaq rose 0.58 percent.
Bond investors were driven by government data that showed employers added the fewest new jobs in more than two years. While Wall Street does not want consumers to feel less secure in their jobs and perhaps curb their spending, a spike in wages amid a tight labor market could stir concerns about inflation.
The price of the 10-year Treasury note rose 8/32, to 99 28/32. The note%u2019s yield, which moves in the opposite direction from the price, fell to 4.64 percent from 4.67 percent on Thursday.
The dollar remained mixed against other major currencies yesterday, while gold prices rose.
Light crude oil fell $1.26, to $61.93 a barrel, on the New York Mercantile Exchange.
With acquisitive investors apparently circling media and information properties like Yahoo and Reuters, interest in such companies could be growing. Word of those possible deals comes three days after the News Corporation, run by Rupert Murdoch, offered to acquire Dow Jones & Company for $5 billion. Dow Jones rose 3 cents yesterday, to $55.80, as the likelihood of a deal remained unclear. News Corporation climbed 21 cents, to $21.87.
Yesterday%u2019s takeover news sent the targeted companies higher. Yahoo rose $2.80, or 9.9 percent, to $30.98, while Reuters rose $15.84, or 26.9 percent, to $74.76. Investors, who tend to distance themselves from companies doing the acquiring, sent Thomson down 28 cents, to $43.45, and Microsoft down 41 cents, to $30.56.
