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.
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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In an interview with CBS that aired while most Americans were watching some big game they call the “Super Bowl,” Obama reiterated that he wants to by closing “loopholes and deductions”:
“Well, I don’t think the issue right now is raising rates. The question is, if we’re going to be serious about reducing our deficit, can we combine some smart spending cuts, ‘cause there’s still some waste in government; can we reform our health care programs in particular, because we spend a lot more on health care than every other country does, and we don’t get better outcomes, so there’s a lot of waste in the system, and there are things that we can do to reduce ; and can we close some loopholes and deductions that folks who are well-connected and have a lot of accountants and lawyers can take advantage of, so they end up paying lower rates than a bus driver or a cop, can we close some of those loopholes?”
“If we combine those things together, then we can not only reduce our deficit, but we can continue to invest in things like education and research and development that are going to help us grow…without raising rates again.”
“There is no doubt we need additional revenue coupled with smart spending reductions in order to bring down our deficit, and we can do it in a gradual way so that it doesn’t have a huge impact.”
First of all, he says, “If we’re going to be serious about reducing our deficit…” Well, they’re not serious, so everything after that conditional phrase is irrelevant. They don’t even acknowledge that they have a spending problem. Obama’s buddy Paul Krugman said , nor is there a deficit problem. In fact, during this sluggish economy, it’s wise to run a deficit and increase spending.
Their thinking is that if they decrease spending, that would only contribute to unemployment because of all the government jobs that would be eliminated. So they have to find ways to expand government, thereby creating jobs for people who lost their private sector jobs (most likely because of government regulations and a government-created depression).
He wants to close loopholes and deductions that allow those “rich tax cheats” to dodge higher taxes. He said that it’s not fair that a bus driver has to pay a higher tax rate than a rich guy who has “connections” to good . But Obama should be happy that he’s helped create a whole industry of accountants whose job it is to find ways for people to avoid paying higher taxes. That’s creating jobs.
But Obama doesn’t want those kinds of jobs. He wants people working government jobs, and once you become a prominent government worker or politician, then you can become a tax cheat (like Tim Geithner).
Later in the interview, Obama lamented that these rich people dodge the tax system by keeping their money in in the Cayman Islands. Well, Romney isn’t the only one with money in the Cayman Islands. Obama does too. So, what Obama really meant to say was that we need to demand that the rich pay their fair share unless that rich person works for the government (and preferably a Democrat) or a corporation that makes large contributions to Obama and his buddies.
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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.
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!!!
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[BRIEFING.COM] The major averages finished the session on a lower note as the S&P 500 lost 0.4% while the Nasdaq shed 0.1%. The Russell 2000, which paced the retreat on Tuesday and Wednesday, added 0.2%, trimming its December loss to 3.5%.
After spending the first half of the session in a steady retreat, the S&P 500 found technical support in the 1772 area. Upon reaching that level, the index reversed sharply, and marched back to its flat line. There was no particular catalyst ... More
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