US STOCKS-Wall Street buoyed by earnings, deal talk
By Angela Moon
NEW YORK, Aug 17 (Reuters) - U.S. stocks rose on Tuesday as earnings from major retailers and a $39 billion takeover bid in the agriculture sector restored optimism about the profit outlook.
Growth prospects also improved with a jump in U.S. industrial production, which helped counter some recent signs of a slowdown that had been driving investors from the equities market.
The materials sector handily outperformed the broad market after BHP Billiton Ltd (BHP.AX)(BLT.L) made an unsolicited $39 billion takeover bid for Potash Corp of Saskatchewan Inc (POT.TO)(POT.N), which was rejected by the world's largest fertilizer maker as "grossly inadequate." For details, see [ID:nSGE67G0DT].
Potash's U.S.-traded stock surged 27.5 percent to $142.96. Fertilizer producer CF Industries (CF.N) jumped 5.2 percent to $88.95 after Goldman Sachs upgraded the stock, while the materials sector .GSPM gained 2.9 percent.
The Dow was buoyed by gains in Wal-Mart Stores Inc (WMT.N) and Home Depot Inc (HD.N) after both companies reported profit that topped expectations. Wal-Mart was up 1.9 percent at $51.38 and Home Depot gained 4.8 percent to $28.69. [ID:nN17234410] [ID:nN17114618]
"The deal talk is a big catalyst for today's rally. It validates that there is a greater confidence in the outlook for materials companies," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in New Jersey.
The Dow Jones industrial average .DJI was up 169.16 points, or 1.64 percent, at 10,471.17. The Standard & Poor's 500 Index .SPX was up 19.25 points, or 1.78 percent, at 1,098.63. The Nasdaq Composite Index .IXIC was up 39.69 points, or 1.82 percent, at 2,221.56.
Data showing sturdy growth in industrial output, implying the economy has enough strength to keep growing, gave a boost to basic materials shares and technology stocks.
Agriculture and fertilizer stocks led gains as midcap Intrepid Potash (IPI.N) jumped 7.1 percent to $25.65. [ID:nN17137167]
Heavy-equipment maker Caterpillar (CAT.N) was up 2.8 percent at $70.36, providing the Dow its second-biggest boost.
Investors had been shunning the stock market for most of last week, preferring assets considered safe havens like the U.S. dollar and bonds.
Other economic data was mixed, with housing starts rising in July to a weaker level than expected. However, prices paid at the farm and factory gate, excluding food and energy, rose 0.3 percent in July, easing investor worries about the threat of deflation. (Reporting by Angela Moon, Editing by Kenneth Barry) |
