U.S. Stocks Higher; Deal Flow, Earnings In View
NEW YORK (MarketWatch) -- U.S. stocks pulled higher Monday, drawing support from above-forecast results from Schering-Plough Corp. and Merck & Co. and merger news in the financial, oil-drilling and equipment-rental sectors.
The Dow Jones Industrial Average was up 55 points at 13,906, as 23 of its 30 stocks advanced, led by the likes of General Electric Co. , Procter & Gamble Co. , AT&T Inc. and Verizon Corp. .
Leading the gains among blue chips, shares of Merck jumped 5.7%. The pharmaceutical company lifted its annual earnings forecast and its quarterly results exceeded Wall Street's expectations.
Away from the Dow, rival pharmaceutical giant Schering-Plough Corp. climbed 0.8%, after its revenue and earnings per share both beat expectations.
The S&P 500 was up 5.5 points at 1,539 and the Nasdaq Composite gained 2.3 points at 2,689.5.
On Friday, U.S. stocks dropped sharply amid worse-than-forecast results from Google Inc. and Caterpillar and nervousness in the credit market. But absent of new developments over the weekend, investors still focused on earnings.
"It's all going to be about earnings this week," said Peter Cardillo, chief market economist at Avalon Partners. "There aren't any important economic numbers until later this week. So we should be focused on earnings."
Deal flow news
GlobalSantaFe and Transocean agreed to merge to form a $53 billion drilling firm. Transocean shareholders will receive $33.03 in cash and 0.6996 share of the new company while GlobalSantaFe holders are getting $22.46 in cash and 0.4757 share. The firms are planning a $15 billion recapitalization to dole out the cash to investors.
GlobalSantaFe stock was 6.4% higher and Transocean shares rose 7.5%.
In other merger, news Barclays sweetened its offer for ABN Amro to $93 billion and added a cash portion to it. ABN shares rose 12 cents to $50.96.
United Rentals Inc. stock rose 2.4%. The equipment-rental company is being purchased by Cerberus in a deal valued at $6.6 billion.
Hewlett-Packard Co. is buying Opsware Inc. , which makes automation software, for about $1.6 billion. The computer company said the deal will enhance its portfolio of business technology optimization software.
In other news, Wal-Mart Stores Inc. said it will slash prices on 16,000 items this week in preparation for the crucial back-to-school shopping season, and plans to roll out an advertising campaign to address how to save money amid still-high gas prices.
Other markets
Treasurys fell slightly in the early going, after rallying on Friday on worries about subprime meltdown contagion. The 10-year benchmark note was down 2/32 at 96 14/32 with a yield of 4.961%.
The dollar traded fractionally higher against the euro and the yen early Monday, coming off a record low against the euro and a six-week low against the yen reached during the Asian trading session. "Concern over subprime lending in the U.S. continues to dominate currency markets" as the new week gets underway, said David Jones, chief market analyst at CMC Markets.
The dollar stood at $1.3821, compared with $1.3825 late Friday. The dollar was quoted at 121.33 yen vs. 121.18 yen.
Crude futures prices softened from 11-month highs as OPEC President Mohamed al-Hamli reportedly said the cartel may increase output as a result of concern that high oil prices might damp global growth.
The September crude contract was 37 cents lower at $75.42 an ounce.
Gold futures edged lower, as traders locked in some gains. The August futures contract fell 90 cents at $683.80 an ounce.
By Kate Gibson