Stocks rise on earnings, M&A

AOL will buy The Huffington Post. Danaher will acquire Beckman Coulter in a deal worth $6.8 billion. Humana posts a loss but raises its 2011 forecast.

By MSNMoney partner Feb 7, 2011 9:42AM

Wall Street © Comstock Images/agefotostock

thestreetBy Melinda Peer, TheStreet

 

Updated at 12:38 p.m. ET

 

Stocks pushed higher as investors cheered a fresh round of deals news and signs that tension in Egypt appeared to be easing.

 

At 12:38 p.m., the Dow Jones Industrial Average ($INDU) was up 82.7 points, or 0.6% to 12,174. The S&P 500 ($INX) was up 9.8 points, or 0.7%, at 1,320 and the Nasdaq ($COMPX) was gaining 23.3 points, or 0.8%, at 2,792.

 

Capital goods, conglomerates and financials were pushing stocks higher while healthcare and energy sectors were showing the mildest gains.

 

Bank of America (BAC), American Express (AXP), Hewlett-Packard (HPQ) and JPMorgan Chase(JPM) were topping the Dow, while Pfizer (PFE), Kraft Foods (KFT), AT&T (T) and Verizon (VZ) were the biggest laggards.

 

There were 833 million shares trading on the Nasdaq and 357 million shares changing hands on the New York Stock Exchange, 74% of which were advancing while 23% were declining.

 

Investors were weighing news of several deals Monday, including Danaher's (DHR) agreement to buy biomedical testing equipment maker Beckman Coulter (BEC) for $83.50 a share in cash, or roughly $6.8 billion, including assumed debt. Shares of Danaher were up by 3.2% at $49.53 and Beckman Coulter's stock was trading 9.7% higher at $82.49.

 

AOL (AOL) agreed to acquire the online news site The Huffington Post for $315 million. As part of the deal, the site's co-founder and editor-in-chief Arianna Huffington will be named president and editor-in-chief of The Huffington Post Media Group, which will integrate all Huffington Post and AOL content. Shares of AOL were down 1.1% at $21.69.

 

 

Offshore contract drilling company Ensco (ESV) agreed to acquire Pride International (PDE) for $41.60 a share in cash and stock. Pride International’s stock was trading 15.7% higher at $39.80 while Ensco’s stock was down by 4.7% at $51.83.

 

Shares of Chesapeake Energy (CHK) were up by 6% to $31.86 on news that it plans to sell all of its Fayetteville Shale gas assets, as well as its equity investments in Frac Tech Holdings and Chaparral Energy.

 

Peter Tuz, Chase Investment Counsel president, said Monday's gains were driven by the buzz surrounding the mergers. 

 

"You're seeing companies spend their money and I think that's improving sentiment. Plus, the fact that we didn't see any deterioration in the Egypt situation over the last couple of nights is probably helping a little bit, too," Tuz said.

 

On Sunday, Egyptian government officials met with opposition leaders in an effort to end the nearly two weeks of political unrest that has ground normal operations to a halt in Cairo. By Monday, banks had reopened but the stock market remained closed.

 

In earnings news, health care benefits provider Humana (HUM) said fourth-quarter earnings fell on several expenses but raised its forecast for 2011 because of better-than-expected sales of its Medicare Advantage and stand-alone prescription plans. The stock was trading 1.9% lower at $59.38.

 

The market will likely focus on earnings during a session that will be light on data. Time Warner Telecom (TWTC) is slated to post a profit of 11 cents a share.

 

At 3 p.m. ET, the Federal Reserve will issue its December consumer credit report.

 

In commodity markets, the March crude oil contract was trading 26 cents lower at $88.77 a barrel. The most actively traded April gold contract was up by $2.60 to trade at $1,351.60 an ounce.

 

The dollar strengthened against a basket of currencies, with the dollar index up by 0.1%. The benchmark 10-year Treasury fell 9/32, lifting the yield to 3.674%.

 

Japan's Nikkei gained 0.5%, and the Hong Kong Stock Exchange fell 1.5%. London's FTSE was gaining 0.7%, while the DAX in Frankfurt was also up by 0.8%.

 

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48Comments
Feb 7, 2011 11:00AM
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"The 10 yr note has surpassed 3.65%, probably much to the chagrin of the Fed.  Perhaps they need to go ahead and announce plans for QE4, 5 and 6 since they appear to detest any sort of rise in rates."

The Fed is highly, perhaps even desperately motivated to artificially maintain high treasury prices and low yields to keep the cost of servicing government debt as low as possible, and to keep the government’s impossible debt burden on taxpayers off of the front page news.US Dollar holders – they’re what’s for dinner” or “Privately employed, productive citizens – the other, other white meat” are not headlines our government officials will find much humor in. But as interest rates increase, the cost of our gross irresponsibility in monetary policy will become evident to even the most naive among us.
Feb 7, 2011 1:53PM
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"The Fed is constantly carrying on studies evaluating every important aspect of the economy."

Yeah, and the way they stayed on top of that housing crash, right down to the finer details, was nothing short of extraordinary. Negligent and clueless, but extraordinarily so. 
Feb 7, 2011 5:17PM
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Wede sheeple...

 

First off, as people who read posts here for awhile know I railed against W's prescription drug entitlement.  I knew it would cost many times what the CBO forecast (right now it is over 3x what they estimated), like Medicare is close to 20x what they estimated decades ago under LBJ...

 

Sorry, but being FREE means we have the right to make stupid decisions.  When you give up that right you get things like Obamacare.   Whereby the government decides that you MUST buy something because you are too stupid to make your own chocies and take your own risks.  Hand in hand with this is the socialist idea that government MUST rescue the losers at the expense of the winners.

 

Healthcare CANNOT be a right unless you plan to ENSLAVE all healthcare workers.  Considering the butcher of a nurse that stabbed no less than a dozen times last time I had blood drawn, this may not be a bad idea.

 

The easiest way to CONTROL healtcare costs is to control healthcare workers pay.  That must happen given the direction we are heading. 

 

As to my age I am 67.  

 

So to sum up my view...

 

1. No one should be forced to BUY healthcare coverage.

2. Healthcare coverage is not a RIGHT.

3. If you choose not to buy coverage, DO NOT EXPECT someone else to buy it for you.

 

I believe you also asked me my opinion on Social Security.  Being I paid into the program against my will for decades, I will of course avail myself of the return of my money.  If the government had not FORCED me into the program of course I would not expect a dime.

 

I have tried to avoid most comments here besides an occasional slur to green bay packer fans, socialist politicians and left wing radicals, like Comrade AcriveRIA...

 

In a nut shell I believe in FREEDOM, and that means the ability to fail.

Feb 7, 2011 4:23PM
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MFC,

 

I applaud Volker's and your knowledge and understanding of the banking system.

 

But to suggest that no-one saw or could foresee the housing bubble collapse brings into question your command of the subject.

 

I ain't no rocket scientist, but I foresaw the collapse back as early as back in 2006 and was not privy to anywhere near as much data as the government or Fed.   I had many spirited debates with a family member heavily involved in the  building supply industry who viewed the boom as never ending.  Quite simply, I told him that the growth in housing and pricing was unsustainable and would collapse.  Two years later he acknowledged my foresight.  (I also predicted the Packers win 2 months ago)Smile.

 

You and Volker are correct that that the economy and banking are complex.  But there is one thing I caution academics on and that is not getting too caught up in the minutia or you  may no longer able to see the forest through the trees.

 

Feb 7, 2011 11:56AM
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Big businesses are not hiring enough new workers to make any significant improvement in the unemployment rate.  Future employment gains will have to come from the small business sector.  The vast majority of stimulus money has been directed toward large businesses, which are hoarding it or using it for M&A activities.

 

Lower corporate tax rates, paid for by eliminating corporate welfare and special loopholes, would give more money to small businesses, which do not benefit from most tax loopholes and subsidies.

 

If congress would change the way in which health care is funded from employer-based to either a single payer system, like they have in Canada, or to individually paid health insurance, it would eliminate a major drag on small business profits. 

 

And what about creating a Build America bond program specifically to help fund innovation and small businesses?

 

Most of the new jobs and innovation in this country have traditionally been created by small businesses. With a relatively level playing field and better funding options, I think we could see an explosion of new businesses and innovation over the next few years.

Feb 7, 2011 2:08PM
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"I've heard arrogant statements before but Bizown takes the cake. This is like a Graduate student in math saying he understands the field of mathematics"

I said I understood the finer details of QE, Fat Cat - and the statement about the Fed keeping up with all the important details about the economy was yours. It must feel a bit...well, embarrassing to read your post back to yourself. So you lash out. Make up something to deride. All very predictable.

Feb 7, 2011 11:10AM
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Factories boom, but with few new workers
Productivity gains mean many low-skilled workers are shut out
Feb 7, 2011 4:32PM
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DA- I agree.  Anyone not living in a cave from '05-08 should have had an inkling the housing market was unsustainable.  In a prior post, I said as much.  Any guy who thought the price of housing could "increase" as much as 25%/yr was a meth user and/or working for the Feds.
Feb 7, 2011 2:37PM
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VolkerFan, a couple of questions...

 

To your knowledege, has ther ever been hyper-inflation where the government did not vastly increase the money supply?

 

I am convinced that the FED is on course to monitize our debt.   Congress seems unwilling to balance the budget.  Liberals want to tax the rich, so they can continue spending money we don't have. 

 

We don't have a taxing problem, we have spending problem.  W was bad, and Obama worse.

At what point do we just throw in the towel and lop of a few zeros on our currency ala Brazil?

 

Has anyone ever done a long term study on the effects of printing money.   I.E. how long does it take 5% increase in the money supply to result in a 5% across the board price increase.

 

Seems to me there is a direct correlation behind the printing of money and price increases.

 

Government printing of money is just another tax levied on all of us. 

 

Keynesian economics is all about inflating away debt.

Feb 7, 2011 1:46PM
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Bizown:  Before you deride the Fed's policy as irresponsible, you really should understand the finer details of it. 

VolkerFan - The thing is I do understand the finer details, all the way up to the net effect of these details. Now you obviously disagree about the irresponsibility of the Fed, and that's fine - but to suggest I don't understand the details is not only not true, it does not in any way support your argument for the Fed's responsibility in monetary policy. Try something else. 
 As a side note, the net effects of the Fed's QE policy have been totally predictable for months - and I sure have made a lot of money being wrong on this. I can hardly wait until I'm right!
Feb 7, 2011 11:16AM
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That Groupon Ad sure was tastless.

 

And I have to agree, most of the other ads were pretty lame.

Feb 7, 2011 3:38PM
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"Government printing of money is just another tax levied on all of us. 

Keynesian economics is all about inflating away debt."


You must not understand the fine details either. Obviously, anyone who does not agree with what the Fed is doing does not understand the "hideously complex" fine details of their brilliancy. Sure they missed the entire prelude to the .com bust, the housing bust and the world's economic financial meltdown. But hey, like Fatazz states - The Fed is constantly carrying on studies evaluating every important aspect of the economy. With all these studies going on I'm sure they will get it right this time.

Feb 7, 2011 1:20PM
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Flav:  The monetary base is on the federal reserve's website.  The question remains as to if that new cash is going to actually circulate or multiply via lending.

Bizown:  Before you deride the Fed's policy as irresponsible, you really should understand the finer details of it.  Based on your posts, your understanding of monetary policy is akin to understanding that a light switch turns on a light.  A lot more is happening to make sure there isn't too much power flowing through the switch.  It make the example a little more apt, you've been flipping the same switch all your life (the federal reserve has always been buying and selling bonds, mostly buying to expand the money supply) but after seeing one or two power surges from poorly wired homes (Weimar and Zimbabwe) you never want to touch the switch again.
Feb 7, 2011 11:03AM
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2Sick-

thanks for the acknowledgement  and the "predicting mantle"- now everyone will be gunning for me!

It sure looked like it was going to be a blowout 1/st half, but Steelers sure gave me chest pains  in the 2nd and delvered an exciting finish.

Dow 12500 by June 30, 13500 by Dec 31  (and I'm sure I'll be sweating a few quarters between now and then).

 

 

Feb 7, 2011 2:03PM
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Fatcat-

true...but if you look at leading indicators and even your own business, you can get a sense if things are getting better of worse. We saw the wheels coming off in 2006. (Tied to housing).

 

2009 was a panic, and the decline was obviously oversold by 20%.  So that was easy money for anyone with a brain and a little guts.

 

With corp earnings up and sitting on piles of cash, and a lot of pent up consumer demand and postponed capital improvements, the spigots are just being turned back on.

 

We're in a slow recovery.  Everyone is obsessing on unemployment - a lagging indicator.  

 

2011 will be a good year for most sectors.  Consumer discretionary and capital goods mfgrs especially. Might be a small corection along the way, but it will recover and market will go up.

 

 Housing will lag (very labor intensive, by the way and a contributor to the slow employment recovery) but eventually that wil come back too.  We're building too few homes now. 

 

I think fears of QE2 setting off inflation are unfounded.  Excess capacity will keep inflation in check.

 

Smart $$ looks for early indicators in funny places.  Heard Greenspan watched underwear sales. 

Feb 7, 2011 1:04PM
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Dunnunder...

I'll be wary, if you promise to be weary.

 

Alot of dates to worry about..11/11/11/ 12/12/12. 12/21/12, Friday the 13th, my wife's birthday, my anniverary ...

Just trying to devine the meaning of they year of the Rabbit.  Fast and dodgy, or hiding in a hole? That crazy wabbit.

Feb 7, 2011 12:58PM
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To Sick-

 

I'l add that date idea to my bag of prognostication tools, along with the goat entrails, pig knuckles and phases of the moon.

 

I see another prediction I made that unemployment would decline 9% was already "achieved", Didn't think i wanted to claim that one because that number will be revised. I don't trust how it is calculated. I fear it dipped because so many people either froze or died of hunger, that the workforce merely contracted via attrition.  Crying  But I'm sure Fatcat  and his survey of the homeless under that bridge has some insight into that.

Feb 7, 2011 2:33PM
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This is why we must oppress the unwashed masses. They operate solely on their emotions without any thought to reason and certainly no time for contemplation. We'll all go to Hell with any of their ideas in operation. Mostly they talk about revenge and the destruction of the rich not knowing that the rich gave them the opportunity to survive. And they always turn to the government or Democrats with their hands out moaning and groaning about not having enough.

 

Yeah the poor will probably inherit the earth and destroy all of it in the process. The poor in the Arab world are hard at work at this very moment. Their only salvation was Hosni, but  they'll get their way and soon be at each other's throats with their long knoves.

Feb 7, 2011 10:10AM
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IGB, yes it was a game clumsily played at times but you play the game you bring. Nobody can beat the Steelers at their best, but, they are human and last night proved it. It is still quite the honor for this team to have risen to this level. Green Bay showed their humanity last night as well but, they are one tough team and congratulations are in order to the "PACK" and their fans.
Feb 7, 2011 2:56PM
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I have another quote, "Never listen to an idiot!"

 

Dr Gregory House MD

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