U.S. Stocks Open Higher On M&A Speculation

LONDON (MarketWatch) -- U.S. stocks opened higher on Wednesday as merger-and-acquisition speculation lifted shares of E-Trade and Nymex Holdings, which helped offset anxiety about a crisis in the credit markets.

The Dow Jones Industrial Average rose 93 points to 13,184, led by shares of Alcoa Inc. , AT&T Inc. and Pfizer.

Financial shares, American Express Co. , Citigroup Inc. and JP Morgan Chase and Co. also were rising.

The S&P 500 rose 13 points at 1,459 and the Nasdaq Composite gained 22 points at 2,542.

"A potential M&A deal between TD Ameritrade and E-Trade is bolstering market spirits this morning," said Marc Pado, a strategist for Cantor.

U.S. stocks were coming off a mixed performance in which investors debated whether, or when, the Federal Reserve would cut interest rates.

But currency action showed that investors were willing to put on more risk Wednesday. The Japanese yen and the U.S. dollar dropped against major rivals, while higher-yielding currencies like the Australian dollar advanced.

"The U.S. dollar, along with the safe-haven yen and Swiss franc, underperformed overnight as a renewed appetite for risk boosted the higher-yielding G10 currencies," said Sophie Hardy, a UBS analyst.

The benchmark 10-year Treasury bill was down 7/32 at 101, with a yield of 4.62%. Gold futures rose $2 to $668.20 an ounce.

Problems in the housing market were still apparent. One home builder, Toll Brothers , Wednesday reported a 85% profit decline; another, WCI Communities , lost $33.2 million during the most recent quarter.

Accredited Home Lenders Holding Co. , the San Diego mortgage-loan provider, said it would stop accepting new loan applications and would restructure, reducing the workforce by 62% to 1,000 from 2,600.

But there also was deal speculation to examine.

TD Ameritrade and E-Trade are discussing a merger, which would create a dominant player in the online-brokerage industry and possibly prompt another industry shakeout, The Wall Street Journal reported, citing people familiar with the matter. E-Trade rose 16% and TD Ameritrade climbed 5%.

Dubai World, the holding company for the Persian Gulf state, agreed a $5 billion investment deal with MGM Mirage that lifted MGM shares by 8%.

NYMEX Holdings rose 6% after it issued a statement saying it's held talks with suitors and said it would cut up to 150 jobs and sell its headquarters.

Also of note, Tech Data climbed 8% after it posted a profit on 14% sales growth.

In the commodities sector, shares of top miner BHP Billiton rose 3.5%. Annual profit rose 28% and it said customers have indicated they don't expect volatility in the U.S and European credit markets to have a material impact on demand for raw materials.

Oil futures reclaimed the $70 a barrel mark ahead of weekly inventories data due out at 10:30 a.m. Eastern.

By MarketWatch