Dow up 99 as Dell buyout keys a rebound

Stocks recoup much of Monday's loss, but the Dow falls back after reaching 14,014. Michael Dell's $24 billion bid for his own company is a spark. Apple rises. Investors cheer Disney and Chipotle results.

By Charley Blaine Feb 5, 2013 4:08PM
© Photodisc Blue/Getty ImagesUpdated: 4:40 p.m. ET.

On Monday, stocks took a bit of a drubbing, prompting worries that the big rally this year was running out of gas. Tuesday's answer is: Not yet. Stocks are rallying strongly, recovering most of Monday's loss.

The prompt for the rally appears to be Dell's (DELL) announcement that it is going private in a deal valued at some $24 billion. The deal will include investments by private equity firm Silver Lake Management and Microsoft (MSFT), the publisher of MSN Money.

At the same time, earnings from food processor Archer-Daniel-Midland (AMD) topped estimates, and Computer Sciences (CSC) raised its 2013 guidance.

Shares of Walt Disney (DIS), Chipotle Mexican Grill (CMG) and online travel company Expedia (EXPE) were all higher on quarterly results reported after the close. That should help the market on Wednesday.

The Dow Jones industrials ($INDU) closed up 99 points to 13,979 after reaching as high as 14,014. On Friday, the blue-chip index had topped 14,000 for the first time since October 2007, only to lose that level in Monday's 129-point selloff. The Standard & Poor's 500 Index ($INX) moved back above 1,500 to 1,511, a gain of 16 points, and the Nasdaq Composite Index ($COMPX) had gained 40 points to 3,172.

Apple (AAPL), closely watched because its market capitalization is the world's largest, was up $15.55 to $457.87. The shares are up about 3.5% since closing at $439.88 on Jan. 25.

Disney, Chipotle results show growth
Disney shares were up $1.01 after hours to $55.19. The company earned 79 cents a share after one-time charges, up from 80 cents a year ago. Under generally accepted accounting, the earnings were 77 cents. Revenue rose 5% to $11.34 billion. Shares rose 39 cents to $54.29 in regular trading.

Chipotle Mexican Grill earned $1.95 a share, in line with estimates and up from $1.81 a year ago. Revenue was up 17% to $699.2 million, in line with the Street estimate. Same-store sales were up 3.8%. Shares were up 2.3% to $312 after hours. The shares had fallen $5.18 to $305.01 in regular trading.

Dell will go private
Dell added 16 cents to $13.42. The world’s third-biggest maker of personal computers agreed to be purchased for $13.65 a share in a deal valued at $24.4 billion.

That’s 25% more than Dell's closing price on Jan. 11 -- the last trading day before Bloomberg News reported that founder and CEO Michael Dell was talking about taking the company private. Dell started the company out of his University of Texas dorm room almost three decades ago.

The economy got some decent news on Tuesday. The Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90% of the economy, fell to 55.2 in January from the prior month’s 55.7. Economists had expected a reading of 55. Readings above 50 signal expansion.

European stocks rebounded from a big slump on Monday that reflected renewed worries about Spain's financial health.

Twenty-eight of the 30 Dow stocks were higher, led by United Health (UNH) and Bank of America (BAC). More than 430 S&P 500 stocks were showing gains along with 92 stocks in the Nasdaq-100 Index ($NDX).

Crude oil (-CL) in New York settled up 47 cents to $96.64 a barrel. Brent crude, which has a strong influence on U.S. gasoline prices, added 97 cents to $116.57 a barrel. Gold (-GC) finished off $2.90 to $1,673.50 an ounce in New York.

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13Comments
Feb 6, 2013 5:50AM
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hey we are buying less gas so they rise the price to make up for the money they are losing. by us  buying less the  price of  gas went down a little  this winter.  but  with the winter  mix as it  is  called  i got 4 miles less per  gal. so even with the  drop in  price   it cost me  more to fill up.  the  less we drive the  more it is going to  cost  either way we  go we are going to lose.
Feb 6, 2013 3:14AM
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NO SELL-OFF COMING. SORRY MSN MONEY. NO SHORT SALES TODAY.
Feb 6, 2013 3:10AM
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Jubak, remember when Dustin Hoffman was given "plastics" as a stock tip in The Graduate?

Next big thing is CARBON FIBER.

In the future, all boats, most airplanes and most cars will be carbon fiber.

Why aren't you onto this and recommending we get into carbon fiber stocks like Zoltek?

What about debt-free companies like Vical that will one day cure diseases?

What about companies researching the next battery?

Why can't Bill Gates put a little more effort into sharing with the world ideas that will move us forward?

No more short-selling articles or down-on-America stories please!!!

Feb 6, 2013 3:02AM
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Michael Dell paying $24 billion for his own company to take it private is poetic justice because he ran that company into the ground with fraudulent marketing techniques like selling new computers with poor quality control with "used" parts inside. One Dell computer caught on fire and a new laptop was dead right in the box. When we tried to return the laptop, Dell stalled for weeks trying to replace it with another of their new but used devices. Eventually we got our money back. I always heard the business customers were treated better than us home users but all I know is the run-around from their answering machine and their low quality standards sent me running for Sony and Apple long ago. I just plain do not trust Michael Dell's integrity and even less so since Microsoft is involved in this deal too. The market didn't go up because of Dell because his stock is a joke. It went up because Europe is in excellent shape and because Walt Disney beat the street and announced a dozen new Star Wars movies. My heart goes out to all the short-sellers at MSN Money who lost another fortune today betting against the USA. Mirhaydari, Jubak, Fleckenstein you need to go to a class on patriotism and start investing for the long haul, not writing fiction designed to bring the market down. Go AMERICA !!!
Feb 5, 2013 11:06PM
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I agree with Brent011      Oil needs to be taken out of the stock market loop   YOU buy oil You take delivery of Oil !!!!  The speculators are why oil prices are so HI   BUT  Imposing a tax on each trade will not work  Just make prices higher... The gov would get the tax money not the consumer. That is  Unless the gov. starts some type of tax credit for every gallon of gas bought
Feb 5, 2013 6:25PM
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And there he is, Haven't seen that old Pig....For awhile..

 

Ahhhh, the Gods bless us, who believe....Shall the Glass always remain Half-Full..

 

Until it runneth over.

Feb 5, 2013 5:53PM
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Profits drive the stock market and companies are reporting healthy profits. Some great stocks are trading with PE ratios in single digits and low teens. You can buy some conpanies at just 5-7x earnings. The market is at bargin basement sale prices right now. I  bought a lot of Dell in October so I made a killing. Check out HFC Holly Frontier. HFC should change its ticker symbol to ATM because it just makes money hand over fist.  
Feb 5, 2013 5:34PM
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Once the reality of high gas prices again settle in, consumer spending will once again be flushed down the toilet. You would think that the Big Traders would eventually learn that in the long run they do not get ahead by shafting us with high oil prices. Congress needs to regulate the trading of oil futures by requiring traders to take full physical delivery of all futures bought ahead. The American people are sick and tired of being ripped off by Wall Street. Another thing Congress could do is to impose a tax on each and every oil trade. Someone has got to slow these Greedy People down.
Feb 5, 2013 5:02PM
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Sorry,   Somehow my comment on pennys wound up here??????
Feb 5, 2013 4:58PM
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  I must have 6 - 3# coffee cans full of pennys and assorted size jars full of pennies, probibly totaling nearly 60 pounds....? I started rolling them years ago and gave up ( even with a coin machine)....  I'm seriously thinking of making boat anchors out of them.....Banks want to charge  a FEE for counting them because people cheat when they turn them in..even my own bank .....I say do away with them and then merchandisers can round off and get away with that damn 99.9/10 at the store and gas stations...??
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[BRIEFING.COM] The headlines generally favored Tuesday being another good day for the stock market.  Instead, it was just a mixed day with modest point changes on either side of the unchanged mark for the major indices.

For the most part, the stock market was a sideshow.  The main trading events were seen in the commodity and Treasury markets, both of which saw some decent-sized losses within their respective complex.

Dollar strength was at the heart of the weakness in ... More

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