Firms’ dealmaking boosts stocks
NEW YORK — U.S. stocks rose Monday as investors were cheered by a spate of corporate dealmaking over the weekend. Technology companies made the biggest gains. But investors were doubtful the biggest deal, AT&T’s agreement to buy Time Warner, will happen.
The Dow Jones industrial average rose 77.32 points, or 0.4 percent, to 18,223.03. The Standard & Poor’s 500 index rose 10.17 points, or 0.5 percent, to 2,151.33. Thanks to the big gains for tech companies, the Nasdaq composite climbed 52.43 points, or 1 percent, to 5,309.83.
Companies announced almost $100 billion in deals over the past few days. Investors had mixed reactions to the moves, but they were pleased the companies were willing to spend.
“Any time you see a lot of IPOs, a lot of merger activity, it boosts confidence,” said Karyn Cavanaugh, senior markets strategist for Voya Investment Strategies.
Big-name technology companies including Apple and Alphabet, which owns Google, rose ahead of their earnings reports this week. Energy companies slipped with the price of oil.
Over the weekend, telecom giant AT&T agreed to buy Time Warner, the entertainment conglomerate that owns HBO, CNN and Warner Bros. Time Warner shares jumped almost 8 percent Friday but remain far below the $107.50 a share that AT&T agreed to pay.
It’s not clear whether regulators will let the companies combine.
“Any deal is seen as reducing competition and unfair to the consumer,” said Cavanaugh, who said there can be major benefits to such deals.
For their part, investors also worried about the price AT&T is paying. The company, which bought DirecTV for $48.5 billion last year, already has about $117 billion in long-term debt.
Shares of AT&T fell 63 cents, or 1.7 percent, to $36.86 while Time Warner lost $2.74, or 3.1 percent, to $86.74.
Elsewhere, aviation electronics company Rockwell Collins agreed to buy commercial aircraft and business jet maker B/E Aerospace for $62 a share, or $6.4 billion in cash and stock. B/E Aerospace climbed $8.28, or 16.4 percent, to $58.89 while Rockwell Collins gave up $5.25, or 6.2 percent, to $79.21.
China Oceanwide Holdings agreed to buy Genworth Financial for $5.43 per share, or $2.7 billion. Genworth traded at $25 a share at the end of 2007, before the financial crisis, and its stock hasn’t recovered. It’s taken steep losses the past few years and on Monday it fell 42 cents, or 8.1 percent, to $4.79.
Benchmark U.S. crude lost 33 cents to $50.52 a barrel in New York after falling more than 2 percent earlier in the session. Brent crude, the international standard, fell 32 cents to $51.46 a barrel in London.
Kimberly-Clark fell $5.67, or 4.7 percent, to $113.91 for its biggest loss in more than a year. The maker of consumer products such as Huggies diapers and Kleenex tissues reported weak results for the quarter and cut its annual sales forecast.
Bond prices slipped. The yield on the 10-year Treasury note rose to 1.76 percent from 1.74 percent.