NEW YORK REPORT
US stocks rallied yesterday snapping a three-day losing streak, as a spurt of corporate takeovers in the technology and health-care sectors fuelled optimism about share values.
Mergers and acquisitions are typically viewed as bullish as it suggests companies are more optimistic about the business outlook.
A number of deals were announced and investors bet more could follow. Xerox agreed to buy Affiliated Computer Services, and Abbott Laboratories said it would pay $6.6bn for Solvay’s drug unit.
The Dow Jones industrial average rose 124.17 points, or 1.28 per cent, to end at 9,789.36. The Standard & Poor’s 500 Index gained 18.60 points, or 1.78 per cent, to 1,062.98. The Nasdaq Composite Index shot up 39.82 points, or 1.90 per cent, to 2,130.74.
With yesterday’s gains, the Dow Jones industrial average held an advance of about 16 per cent in the quarter so far, making it the index’s best such period since the fourth quarter of 1998.
But the end of the third quarter on Wednesday may spur volatility as fund managers sell laggards in favour of out performers to spruce up portfolios at quarter’s end.
In the last three sessions, the S&P 500 had declined more than 2 per cent after rallying nearly 60 per cent from the 12-year year closing low of early March.