Stocks climb on deal, earnings

Walgreen's profit beats estimates. Endo Pharma buys a generics company for $1.2 billion. Consumer confidence falls more than expected. A key home price index increases less than forecast.

By TheStreet Staff Sep 28, 2010 7:55AM

TheStreetBy Melinda Peer, TheStreet

 

Updated at 1:57 p.m. ET

 

Stocks were climbing after a health care deal and strong earnings from Walgreen (WAG) lifted sentiment on Wall Street.

 

At 1:57 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 53 points, or 0.5%, at 10,865. The S&P 500 ($INX) was up by 5 points, or 0.4%, at 1,147. The Nasdaq ($COMPX) was was rising 9.2 points, or 0.4%, at 2,379.

 

Better-than-expected quarterly earnings at Walgreen and Endo Pharmaceuticals' (ENDP) announced acquisition of a generic-drug maker helped stocks reverse earlier losses. Stocks had fallen after key gauges of consumer confidence and home prices fell short of forecasts. 

 

On the Dow, Travelers (TRV), Intel (INTC) and Hewlett-Packard (HPQ) were the biggest gainers, while Cisco Systems (CSCO), Kraft Foods (KFT) and Alcoa (AA) were the laggards.

 

The Conference Board's Consumer Confidence Index slid to 48.5 in September from a revised 53.2 in August. Economists had expected the index to fall to 53.

 

"Until there is meaningful improvement in labor markets and great certainty that a double-dip recession will be averted and growth will reaccelerate, it seems highly unlikely that the sullen mood of consumers will be lifted," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

 

The S&P/Case-Shiller 20-city home price index grew 3.2% in July from a year earlier, falling short of expectations for a 3.3% gain, according to Briefing.com. That compares with June's year-over-year increase of 4.2%. The index declined a seasonally adjusted 0.1% in July from June.

 

Manufacturing activity in the mid-Atlantic area has been declining this month amid lower shipments and weak employment, according to a survey by the Federal Reserve Bank of Richmond. The bank's manufacturing index fell to minus 2 from 11 in August.

 

Global stocks wavered amid renewed European debt concerns, which came amid speculation that Moody's (MCO) might downgrade Spain's credit rating. On Monday, Moody's delivered a three-notch cut to its rating on Anglo Irish Bank. Ratings agencies Fitch and Standard & Poor's also warned that Ireland's credit rating is vulnerable.  

The FTSE in London was falling 0.9%, while the DAX in Frankfurt was down by 1.2%. Hong Kong's Hang Seng fell 1%, and Japan's Nikkei lost 1.1%.

 

Online media company AOL (AOL) is in talks to buy the technology blog TechCrunch, according to The Wall Street Journal. AOL shares were up 0.4% to $23.61.

 

Endo Pharmaceuticals' (ENDP) shares were adding 9.5% to $33.52 after the company said it would acquire Qualitest Pharmaceuticals, a privately held generic-drug company, for $1.2 billion.

 

Aerospace company Boeing (BA) said Air China plans to order four 777-300ERs airplanes for $1.1 billion. Boeing shares were falling 0.6% to $63.49.

 

Walgreen (WAG) said its fiscal-fourth-quarter earnings climbed 7.7% to $470 million, or 49 cents a share, as sales rose 8% to $16.9 billion. The company beat analysts' estimates of a 44-cent profit on revenue of $16.8 billion. Walgreen shares were rising 9.1% to $33.13.

 

The social-network site Facebook will likely sell shares to the public after late 2012, Reuters reported, citing board member and PayPal co-founder Peter Thiel.

 

At 4:30 p.m. ET, the American Petroleum Institute will issue its weekly report on crude oil inventories for the week ended Sept. 24. Analysts surveyed by Platts anticipate an increase of 2.2 million barrels.

 

Crude oil for November delivery was shedding 66 cents at $75.86 a barrel.

  

The December gold contract, the most actively traded gold future, was falling by $3.40 at $1,295.20 an ounce.

  

The dollar was gaining value against a basket of currencies with the dollar index up by 0.2%, while the benchmark 10-year Treasury note strengthened 1/32, diluting the yield to 2.528%.  

 

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