Wave of deals leads stocks higher
Associated Press
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.
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 reporting their earnings this week. Amazon also rose, giving other consumer companies a boost. Energy companies slipped with the price of oil.
The Dow Jones industrial
average gained 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 52.42 points, or 1 percent, to 5,309.83.
Over the weekend telecom giant AT&T agreed to pay $85.4 billion for Time Warner, the entertainment conglomerate that owns HBO, CNN and Warner Bros. Time Warner jumped almost 8 percent Friday but remains far below the $107.50 a share AT&T agreed to pay.
Both presidential tickets have already expressed skepticism about the deal and it’s not clear if regulators will let the companies combine. The concern is that the combined company might favor its own media properties at the expense of those owned by rivals. In recent months the government has stepped in to stop a series of big deals, including two major health insurance mergers.
“Any deal is seen as reducing competition and unfair to the consumer,” said Ms. 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.
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.
Tech stocks have done very well over theplast few months and that could continue as more companies report their earnings. S&P Global Market Intelligence says analysts think earnings for tech companies will grow 6 percent in the third quarter.
Overall earnings for companies in the S&P 500 index are expected to rise less than 1 percent.
Microsoft, which is trading at all-time highs after strong earnings last week, rose $1.34, or 2.2 percent, to $61. Alphabet picked up $11.68, or 1.4 percent, to $835.74 and Apple added $1.03 to $117.63.