By Kristina Peterson

Major stock averages rose slightly Monday thanks to merger news and improving data on employment among manufacturers and personal spending.

The Dow Jones Industrial Average (DJI) was recently up 67 points, or 0.7%, at 10,391.01, just points shy of its 2009 close.

Caterpillar (CAT), which often benefits from signs of strength in the global economy's manufacturing sector, was among the Dow's big winners, up 1.6%. Travelers (TRV) was also strong, up 1.2%, amid a broader rally among insurers after U.K.-based Prudential PLC (PUK) agreed to buy American International Group's (AIG) Asia operations for $35.5 billion in cash and stock.

Prudential PLC isn't related to U.S insurer Prudential Financial Inc. (PRU)

Speculation that a wave of deal making might continue helped the small-cap Russell 2000, which includes many companies that might be acquisition targets of larger rivals. It rose 1.9% in recent action, outperforming other stock-market yardsticks. The measure recently stood at 640.75, up 2.5% on the year.

The Nasdaq Composite Index (RIXF) was up 1.4%to 2269.48. The Standard & Poor's 500-share index (SPX) managed a 0.9% rise to 1114.3, off by a fraction for the year.

"It's encouraging to see a lot of willing buyers out there," said strategist Jack Ablin, of Harris Private Bank in Chicago. "It calls attention to the fact that there's a lot of corporate cash sitting on balance sheets, which makes you wonder who else might be willing to step up and buy something at a bargain."

Some investors, however, saw a downside to the Prudential deal, which helped to send the British pound down sharply on fears that completion of the merger would entail heavy selling of the sterling in lieu of dollars.

One pound cost $1.4987 on Monday, down from $1.5249 late Friday. The euro was also sharply lower as some traders bet that steps to prop up heavily indebted Greece might be near. The U.S. Dollar Index (DXY)climbed 0.5%.

The greenback's strength helped to fuel a general pullback in prices of raw materials, with the Dow Jones-UBS Commodity Index off 0.7%. But copper was a notable exception to the pullback, in part because of the weekend's earthquake in Chile, which is the world's largest producer of the metal.

Traders said there was a rush to cover bearish bets Monday, though most participants expect little near-term disruption to Chile's mining industry, which is centered around ore deposits several hundred miles from the epicenter of the recent earthquake

"The market reacted rather emotionally," said Mike Frawley, global head of metals for the futures brokerage Newedge. But he added: "As tragic as the events were, the copper production seems to have been spared, notwithstanding some power outages to a few production sites."

In New York trading, copper futures jumped 2% to $3.3330 per pound, the highest close since Feb. 19. Traders described the buying as a knee-jerk reaction. Prices of gold, silver, and oil were lower.

In U.S. economic data, the Institute for Supply Management reported Monday that its index of manufacturing activity slipped a bit to 56.5 last month, but still reflected an expansion in manufacturing. Its employment index grew for the third consecutive month.

Personal spending climbed slightly more than expected, though personal income rose less than anticipated. The saving rate slowed to the smallest since 2008 and the core price index for personal consumption expenditures, excluding volatile food and energy, rose 1.4%, compared to January 2009. Construction spending also declined 0.6%, as expected.

Among stocks to watch, Scandisk (SNDK) leapt 12.1% after boosting its first-quarter guidance to reflect increased demand for memory chips.

German drug and chemical company Merck KGaA, unrelated to the U.S. drug maker, said it will buy biotech supply company Millipore (MIL) for $7.2 billion, lifting Millipore shares by 11.2%. American depository shares of Merck KGaA gained 2.9%.

Market-index firm MSCI said it will buy proxy adviser RiskMetrics Group (RISK) for $1.55 billion, sending RiskMetric shares up 13.3%. Class A shares of MSCI declined 4.6%.

New York Stock Exchange composite volume was light, hitting 3.3 billion shares. Advancers outnumbered decliners by almost four to one.

Treasury prices advanced slightly, with the 10-year note up 3/32 to yield 3.608%.

 
 
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