- The Washington Times - Wednesday, December 21, 2005

NEW YORK (AP) — Wall Street overcame its recent caution yesterday, with a raft of acquisitions propping up stocks and lower-than-expected gross domestic product growth easing inflation fears.

Acquisitions in the technology and pharmaceutical industries promised to reinvigorate those lagging sectors. Google Inc., Seagate Technologies and IBM Corp. all announced major purchases, while Allergan Inc. said it will buy Inamed Corp.

And while final third-quarter GDP was lower than anticipated, with the economy growing at an annualized rate of 4.1 percent instead of the expected 4.3 percent, investors welcomed the news as another sign that the Federal Reserve would be hard-pressed to continue raising interest rates. The 4.1 percent growth rate was still considered strong.

Yet despite the good news, stocks still saw a downturn in afternoon trading, giving up more substantial gains from earlier in the session. While stocks are not expected to give up the year’s modest gains, a further substantial push higher remains in doubt.

The Dow Jones Industrial Average rose 28.18, or 0.26 percent, to 10,833.73. The Dow had been more than 94 points higher earlier in the session.

Broader stock indicators also moved higher. The Standard & Poor’s 500 Index climbed 3.17, or 0.25 percent, to 1,262.79, while the Nasdaq Composite Index added 9.24, or 0.42 percent, to 2,231.66.

Bonds continued the previous session’s sell-off, with the yield on the 10-year Treasury note rising to 4.49 percent from 4.47 percent late Tuesday. The dollar rose against most major currencies, while gold prices edged higher.

Crude oil futures were little changed after the Energy Department reported a slight rise in the nation’s crude oil stockpiles. A barrel of light crude was quoted at $58.55, down a penny, on the New York Mercantile Exchange.

With just six trading days to go before 2006, the year likely will end with modest gains, as opposed to 2004’s strong year-end rally.

The acquisition deals fueled plenty of trading activity yesterday. Despite posting early gains, Google fell $3.41 to $426.33 after winning the bidding war for a piece of Time Warner Inc.’s America Online division, paying $1 billion for a 5 percent stake. Time Warner lost 16 cents to $17.58, while Microsoft Corp., which had hoped to edge out its online rival for the stake, slipped 13 cents to $26.73.

Computer hard-drive maker Seagate said it will pay $1.9 billion in stock for rival Maxtor Corp., hoping the combined company will be able to reduce costs while gaining market share. Seagate climbed 63 cents to $20.23, while Maxtor, which is valued at $7.25 per share in the deal, soared $2.41, or 53 percent, to $6.93.

Dow industrial IBM added 64 cents to $83.12 after announcing the purchase of Micromuse Inc., which makes software to manage video and voice traffic on computer networks, for $865 million in cash, or $10 per share. Micromuse surged $2.71, or 38 percent, to $9.92.

In the pharmaceutical sector, Inamed climbed $1.26 to $87.02 after Allergan, best known for its Botox skin treatment, agreed to pay up to $3 billion for the medical device maker.

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