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U.S. stocks rise on acquisition activity, earnings optimism
Published in Saudi Press Agency on 11 - 07 - 2007


Wall Street bounced back Wednesday from
its sharp decline a day earlier, boosted by takeover activity ahead of second-quarter earnings reports, according to AP.
Investors shaken by profit warnings earlier in the week
appeared to be cautiously optimistic as they awaited
quarterly earnings reports.
Meanwhile, new merger and acquisition activity encouraged
buying. Steelmaker Gerdau Ameristeel Corp. said late
Tuesday it was buying Chaparral Steel Co. for $4.22 billion
(¤3.07 billion), while speculation mounted Wednesday that
Colgate-Palmolive Co. was interested in buying all or part
of Unilever.
Giving the stock market an extra lift, Fed officials
alleviated some jitters about problems involving subprime
lending. Philadelphia Federal Reserve President Charles
Plosser said the financial system is well-equipped to
handle home loan risks, and Fed Governor Kevin Warsh said
that while subprime exposure troubles may not be over, they
are not spilling into the broader economy.
Market watchers found it auspicious that Wall Street
managed to recover some ground from its tumble Tuesday,
when the Dow Jones industrial average lost 148 points, but
said investors may not be out of the woods yet.
«There's still, I sense, some caution, and I think the
principal reason for the caution is that we have the heart
of the earnings season ahead of us,» said Hugh Johnson,
chairman and chief investment officer of Johnson Illington
Advisors. «No one wants to make a major commitment to the
market until we see the earnings reports. Earnings reports
are a big hurdle that's on the horizon.»
The Dow rose 76.17, or 0.56 percent, to 13,577.87.
Broader indexes also rebounded. The Standard & Poor's 500
index gained 8.64, or 0.57 percent, to 1,518.76, and the
Nasdaq composite index advanced 12.63, or 0.48 percent, to
2,651.79.
Bonds slipped as investors re-entered the stock market.
The yield on the benchmark 10-year Treasury note rose to
5.08 percent from 5.03 percent late Tuesday.
The dollar fell to a new record low against the euro and a
26-year low versus the British pound, but rose versus the
yen.
Stocks plummeted Tuesday on disappointing forecasts from
Home Depot Inc., Sears Holdings Corp., and homebuilder D.R.
Horton Inc., and after Standard & Poor's and Moody's said
they would slash the ratings of billions of dollars worth
of bonds backed by subprime mortgages.
The market's concerns about risky home loans are likely to
keep dogging the market. «The actual financial impact is
anybody's guess. The market doesn't like uncertainty,»
said Jim Herrick, manager and director of equity trading at
Baird & Co.
After the closing bell Tuesday, the stock market, which
has been positioning itself for next week's onslaught of
earnings reports, got some promising news. Oil company
Chevron Corp. said it expected its quarterly financial
results would be boosted by higher commodity prices and
stronger refining margins. Chevron rose $1.67 to $90.67.
Also late Tuesday, Gerdau said it was buying steel rival
Chaparral. Chaparrel rose $7.98, or 10.5 percent, to
$83.67, and Gerdau fell $1.21, or 7.7 percent, to $14.48.
Unilever rose $1.03, or 3.2 percent, to $32.94 on the
Colgate takeover rumors, while Colgate rose $1.08 to
$66.85.
Advancing issues narrowly outnumbered decliners on the New
York Stock Exchange, where volume came to 1.44 billion
shares.
The Russell 2000 index of smaller companies rose 2.49, or
0.30 percent, to 839.97.
Thursday will bring the Commerce Department's reading on
the international trade balance, and sales reports from
various retailers.


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