IBM deal, earnings boost stocks
An economics panel declares an end to the longest recession since World War II. IBM will buy Netezza for $1.7 billion. Lennar and Discover post positive results. Gold hits a new high.
By Melinda Peer, TheStreet
Updated at 1:28 p.m. ET
At 1:28 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 107 points, or 1%, at 10,715. The S&P 500 ($INX) was up by 12 points, or 1%, at 1,137. The Nasdaq ($COMPX) was rising by 24 points, or 1.1%, to 2,340.
The nonprofit National Bureau of Economic Research said the recession that began in December 2007 officially ended 18 months later in June 2009, suggesting the economy has returned to growth. The next-longest decline during that period lasted 16 months.
"There's a real sense that there's very little negative that hasn't already played out," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. "We see a lot more positives than negatives on the horizon."
Technology stocks were rallying after IBM (IBM) said it would buy software company Netezza (NZ) for $1.7 billion. IBM shares were advancing 0.4% to $130.73, and Netezza's stock was climbing 13% to $27.69.
American Express (AXP) was the top-performing Dow company, rising 3.5% after rival Discover Financial (DFS) reported quarterly results that surpassed expectations. JPMorgan (JPM) and Alcoa (AA) were also gaining. Cisco (CSCO) and Merck (MRK) were among the benchmark's few losers.
Discover posted a fiscal-third-quarter profit of $260.6 million, or 47 cents a share, beating analysts' estimates of a 37-cent profit, according to Thomson Reuters. Discover shares were jumping 3.7% to $16.13.
American International Group (AIG) plans to list its Asian life insurance unit, AIA Group, on the Hong Kong stock exchange on Oct. 29 to raise $15 billion, less than a deal that AIG's board rejected, according to Reuters. Shares of AIG were up by 1.7% at $36.26.
Homebuilder Lennar (LEN) swung to a third-quarter profit of 16 cents a share, exceeding the gains of 5 cents a share that analysts had expected, according to Briefing.com. Sales of $825 million also beat estimates. Lennar shares were up 3.8% at $14.52.
Lennar's strong results helped counter a weaker-than-expected report on homebuilding conditions. The National Association of Home Builders/Wells Fargo housing market index was unchanged at 13 in September. Measures of less than 50 indicate that builders consider conditions poor. Economists had expected the index to climb to 14, according to Briefing.com.
In other company news, Clorox (CLX) is nearing an agreement to sell its STP and Armor All car-care brands to private-equity firm Avista Capital Partners for $750 million to $800 million, according to Bloomberg. Clorox shares were rising 0.4% to $66.93.
L-1 Identity Solutions (ID) was soaring 20% to $11.62 after France's Safran purchased the company for $12 per share in a $1.1 billion deal.
Verizon Communications (VZ) named Lowell McAdam its new president and chief operating officer, putting him in line to succeed chief executive Ivan Seidenberg. Verizon shares were gaining 0.4% to $31.79.
In commodity markets, crude oil for November delivery was gaining 84 cents to $75.50 a barrel. The December gold contract, the most actively traded gold future, was rising by $4.50 to $1,282 an ounce. Gold hit a record high of $1,284.90 earlier today.
The dollar was trading slightly lower against a basket of currencies, with the dollar index down by 0.1%.
The benchmark 10-year Treasury note rose 2/32, diluting the yield to 2.737%. The Federal Reserve's policymaking arm will meet tomorrow.
The FTSE in London was adding 1.5%, and the DAX in Frankfurt was gaining 0.9% after Irish Finance Minister Brian Lenihan said the country wouldn't need aid from the European Union.
Hong Kong's Hang Seng rose 0.03%, while Japanese markets were closed for a holiday.
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- Dec gold rose for the first time in six sessions as it gained support from Janet Yellen's speech at the Jackson Hole Symposium. Ms. Yellen said the FOMC sees significant underutilization of labor resources and that the labor market has not fully recovered despite recent gains. The yellow metal advanced to a session high of $1282.80 per ounce and settled with a 0.4% gain at $1280.30 per ounce, booking a 2.0% loss for the week.
- Sep silver touched a session high ... More
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