Merger and acquisition activities and a rally in small-cap
stocks propelled benchmarks to record highs on Monday. New deals
between Analog Devices and Hittite, Hillshire Brands and Tyson
Foods, and Merck and Idenix lifted investor sentiment. Meanwhile,
news that Carl Icahn has a 9.4% stake in Family Dollar was also a
catalyst. The S&P 500 ended at another high; the nineteenth one
this year. The blue-chip index closed at a record level for the
ninth time this year.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.1% to close
Monday's trading session at 16,943.10. The Standard & Poor 500
(S&P 500) went up almost 0.1% to finish at 1,951.27. The
tech-laden Nasdaq Composite Index advanced 0.3% to 4,336.24. The
fear-gauge CBOE Volatility Index (VIX) went up 3.9% to settle at
11.15. Total volume on the New York Stock Exchange was 2.8 billion
shares. Advancers outpaced declining stocks on the NYSE. For
59% stocks that advanced, 37% declined.
Merger and acquisition activity boosted investor sentiment. Shares
of semiconductor company Analog Devices, Inc. (NASDAQ:
) jumped 5.0% after the company agreed to acquire Hittite Microwave
) for about $2 billion. The chip maker said that it will buy
Hittite at $78 per share in cash, a premium of about 29% more than
Hittite's closing price of $60.56 on Friday. Shares of Hittite
New deals in the consumer goods and the health care sectors also
added to the bullish sentiment. Shares of The Hillshire Brands
) surged 5.3% after Tyson Foods, Inc. (NYSE:
) agreed to buy Hillshire in an all-cash deal valued at $8.55
billion or $63 per share. Shares of Tyson Foods and Pilgrim's Pride
plunged 6.5% and 6.7%, respectively.
Tyson Foods had been competing with rival Pilgrim's Pride
) to acquire Hillshire Brands. Tyson Foods' offer price of $63 per
share came in after Pilgrim's Pride raised its offer to $55 per
share on June 3, which values the company at $6.7 billion. On May
29, Tyson Foods had initially offered to buy the maker of Jimmy
Dean sausage for $6.8 billion or $50 per share in cash. The offer
was more than Pilgrim's Pride offer to buy Hillshire in an all-cash
deal valued at $6.4 billion or $45 per share on May 27.
In another development, Merck & Co. Inc. (NYSE:
) agreed to acquire Idenix Pharmaceuticals Inc. (NASDAQ:
) for $24.50 per share, which values the company at $3.85 billion.
The acquisition will give Merck access to Idenix's treatments for
hepatitis C. Shares of Idenix Pharmaceuticals more than tripled,
gaining a significant 229.1%. Shares of Merck also increased 0.2%.
Separately, gains in small-cap stocks also ensured a positive
finish for the benchmarks. The Russell 2000 Index of small-caps
went up 0.9% on Monday. The index for small-cap stocks advanced
4.4% in the last four sessions and is now up 1.0% in 2014.
Meanwhile, investors assessed St.Louis Fed President James Bullard
and Boston Fed President Eric Rosengren's comments. James Bullard
said he believes the economy is moving closer to its two major
goals of maximum employment and stable prices. He stated that
inflation is now "moving higher", a significant shift from his
earlier comment. Last month, he stated that inflation was stable.
Eric Rosengren, a nonvoting member of the policy committee, stated
that a cautious and predictable exit plan is the best way forward
in order to evade market concerns over higher interest rates.
Six out of 10 sectors of the S&P 500 ended in the green. The
SPDR S&P Homebuilders ETF (XHB) led the advance among the
S&P 500 sectors. The sector gained 1.1%. Key housing stocks
from the sector such as DR Horton Inc. (NYSE:
), Lennar Corp. (NYSE:
), Toll Brothers Inc. (NYSE:
), KB Home (NYSE:
), Beazer Homes USA Inc. (NYSE:
) and PulteGroup, Inc. (NYSE:
) increased 0.8%, 0.4%, 1.1%, 1.1%, 0.7% and 0.5%, respectively.
The Industrial Select Sector SPDR (XLI) gained 0.5%, the second
highest among the S&P 500 sectors. Key stocks from the sector
such as General Electric Company (NYSE:
), United Technologies Corp. (NYSE:
), Union Pacific Corporation (NYSE:
) and 3M Company (NYSE:
) increased 0.9%, 1.0%, 1.2%, and 0.5%, respectively.
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ANALOG DEVICES (ADI): Free Stock Analysis
HITTITE MICROWV (HITT): Free Stock Analysis
HILLSHIRE BRAND (HSH): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis Report
PILGRIMS PRIDE (PPC): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
IDENIX PHARMA (IDIX): Free Stock Analysis
D R HORTON INC (DHI): Free Stock Analysis
LENNAR CORP -A (LEN): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
BEAZER HOMES (BZH): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
UNION PAC CORP (UNP): Free Stock Analysis
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