- The Washington Times - Monday, July 24, 2006

NEW YORK (AP) — Wall Street rallied on a burst of optimism yesterday as the multibillion-dollar buyout of HCA Inc. and upbeat earnings from a pair of drug makers tempered anxiety about an economic slowdown. The Dow Jones Industrial Average soared more than 180 points.

Acquisitions led the day’s headlines, with three equity firms agreeing to take hospital operator HCA private for $21.3 billion of cash and the assumption of $11.7 billion in debt, marking the largest-ever leveraged buyout. Advanced Micro Devices Inc. (AMD) also acquired ATI Technologies Inc. for $5.4 billion.

The acquisition news relieved investors concerned about a weakening economy. Corporate buyouts typically signal optimism over economic growth; a profit warning from Dell Inc. late last week dimmed the near-term outlook and dragged the Nasdaq Composite Index to a 14-month low.

Solid earnings from drug makers contributed momentum. Dow Jones industrial Merck & Co. said its second-quarter earnings more than doubled to top Wall Street estimates, while Schering-Plough Corp. swung to a profit and also beat expectations.

At the close of trading, the Dow surged 182.67, or 1.68 percent, to 11,051.05.

Broader stock indicators were also higher. The Standard & Poor’s 500 Index added 20.62, or 1.66 percent, to 1,260.91, and the Nasdaq jumped 41.45, or 2.05 percent, to 2,061.84.

Big index moves and wide advance-decline margins have become more frequent as of late, as jitters about interest rates, inflation and a slowing economy caused fluctuations in investor sentiment.

Bonds wobbled, with the yield on the 10-year Treasury note edging up to 5.05 percent from 5.04 percent late Friday. The U.S. dollar advanced on the Japanese yen; gold prices dropped to about $615 an ounce.

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