USA Today: Deal news helps stocks recover from early losses
Traders focused more on encouraging signs of confidence in the corporate world including a jump in dealmaking. The Dow Jones industrial average rose more than 46 points, after trading lower much of the session. Broader indexes also rebounded late in the day.
The Conference Board said its September reading on consumer confidence fell sharply from August and was well below forecasts. Stocks have rallied throughout September as many major economic reports suggested that growth was slightly better than previously thought.
Scott Rostan, founder of Training The Street, which provides courses in financial modeling and corporate valuation, said the small move in stocks compared to the big decline in confidence was indicative of a growing schism between consumers and traders.
“There’s a big dichotomy between Main Street sentiment and Wall Street sentiment,” Rostan said. Right now, traders are more focused on sentiment and confidence among corporate executives than consumers, he said.
Drug developer Endo Pharmaceuticals Holdings said Tuesday it will buy Qualitest Pharmaceuticals for $1.2 billion. That comes a day after major companies including Unilever NV and Southwest Airlines Co. announced deals. Wal-Mart Stores Inc. said it was pursuing buying a South African company.
In other corporate news, technology stocks were being dragged down on disappointment that Research in Motion Ltd. said it would not roll out its competitor to Apple Inc.’s iPad, called the PlayBook, until the beginning of 2011. Walgreen Co. soared 9% after the drugstore chain reported income that easily beat forecasts.
The Dow rose 46.10, or 0.43%, to 10,858.14. The Dow has jumped 8.1% this month and is on pace to have its best September since 1939 as expectations for recovery improve.
Investors are “looking beyond today’s news at broader indications a double-dip (recession) is more and more remote,” said Joe Heider, a principal at Rehmann Financial.
Heider said if the Dow can climb above 11,000 it would be a strong indication the market is ready to break out of the broad trading range its been stuck in since hitting its 2010 high in late April.
The Standard & Poor’s 500 index rose 5.54, or 0.5%, to 1,147.70, while the Nasdaq composite index rose 9.82, or 0.4%, to 2,379.59.
Treasury prices rose after the weak report on consumer confidence, driving interest rates lower. The yield on the 10-year Treasury note, which is often used to set interest rates on loans, fell to 2.47% from 2.53% late Monday.
A new report on home prices was also somewhat encouraging Thursday, said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors. The S&P/Case-Shiller home price index rose slightly in July compared with a year ago. It was a slower pace of growth than June, but was slightly better than economists had forecast.
“The fact there might be a floor in the housing market is positive news,” Vernon said. “It’s not getting any worse.”
Endo Pharmaceuticals shares rose $2.49, or 8.1%, to $33.10.
Research in Motion shares fell $1.45, or 3%, to $46.91.
Apple shares fell $4.30, or 1.48%, to $286.86 on heavy volume. Its price plummeted $16.77, or 5.7%, in the first three minutes of trading before quickly recovering most of those losses.
Walgreen shares rose $3.46, or 11.4%, to $33.81.
About four stocks rose for every three that fell on the New York Stock Exchange.
Overseas, Germany’s DAX index fell less than 0.1%, while France’s CAC-40 dropped 0.1%. Britain‘s FTSE 100 rose 0.1%.