Stocks jump after strong report from China
NEW YORK >> U.S. stocks bounced back from recent losses Monday after the Chinese government said that country’s economy grew at a slightly faster pace in the first quarter. Banks jumped as interest rates recovered.
After losses in three of the last four weeks, stocks had their best day in more than a month. The largest gains went to industries that would benefit the most from faster global economic growth.
Among banks, the leaders included M&T Bank, which became the latest financial company to report strong firstquarter results. Technology companies were led by chipmaker Nvidia and Google parent company Alphabet, while online retail giant Amazon and streaming video company Netflix also made large gains.
“It was good news to see a positive number coming out of the world’s second-largest economy,” said Quincy Krosby, market strategist at Prudential Financial. “It was the strongest GDP reading in six quarters, and much of it was based on their infrastructure spending and also the housing market.”
The Standard & Poor’s 500 index climbed 20.06 points, or 0.9 percent, to 2,349.01. The Dow Jones industrial average rose 183.67 points, or 0.9 percent, to 20,636.92. The Nasdaq composite jumped 51.64 points, or 0.9 percent, to 5,856.79. The Russell 2000 index of smaller-company stocks soared 15.94 points, or 1.2 percent, to 1,361.18.
China’s recovering economy grew another 6.9 percent in the first quarter. In 2016 it grew at its slowest pace in almost 30 years, and the government spent more money on construction of infrastructure such as roads and bridges in response. Relatively cheap credit also boosted property sales.
Medical device maker Alere surged after it accepted a modified buyout offer from Abbott Laboratories. Abbott agreed to buy Alere for $56 per share, or $5.8 billion, more than a year ago. But it filed a lawsuit to end the deal after Alere recalled a key product, delayed filing a financial statement, and faced a Justice Department investigation into its business outside the U.S.
Under the new agreement Abbott will pay $51 a share, or about $5.3 billion, and Alere climbed $6.74, or 15.9 percent, to $49.05. It had traded as low as $31.47 last July, as investors worried the deal would fall apart after news of the investigation broke. Abbott rose 64 cents, or 1.5 percent, to $43.31.
Arconic jumped after the company said Chairman and CEO Klaus Kleinfeld agreed to step down after the board of directors discovered that he sent a letter to Arconic’s largest shareholder, activist investment firm Elliott Management, without telling the board. Arconic said that was “poor judgment.” It didn’t say what Kleinfeld wrote in the letter.
Arconic makes aluminum, titanium and nickel parts for planes, cars and electronics. It was spun off from aluminum company Alcoa last year. Elliott has been pushing the company to replace Kleinfeld. The stock gained 79 cents, or 3.1 percent, to $26.69.
Bond prices slipped. The yield on the 10-year Treasury note rose to 2.25 percent from 2.24 percent. Banks are the worstperforming part of the market recently thanks to sharp declines in bond yields and interest rates.
Wireless spectrum license company Straight Path Communications climbed after it said it might get a new buyout offer. A week ago it agreed to be bought by AT&T for about $1.25 billion. Straight Path said it was contacted by another company Thursday. Straight Path stock rose $19.86, or 21.7 percent, to $111.56. Investors are now valuing the company at $1.39 billion.
Eli Lilly and Incyte stumbled after the Food and Drug Administration refused to approve Olumiant, a pill for the immune disorder rheumatoid arthritis. The companies may have to run more studies of the drug, which could further delay its approval and force them to spend more.