New York – Wall Street extended its advance Monday as investors digested new takeover developments and placed bets ahead of the Federal Reserve’s decision on interest rates.
A series of recent acquisition announcements has reassured investors that corporations still feel the economy is robust enough to strike deals. About $45.4 billion worth of acquisitions were announced by Standard & Poor’s 500 companies last week, setting up this year to be the best for mergers and acquisitions since 2000.
Driving the Dow Jones industrials was American International Group Inc., which agreed to buy the U.S. port operations of state-owned Dubai Ports World. Hedge fund SAC Capital Advisors LLC bought a stake in miner Phelps Dodge Corp. and said it would oppose the company’s planned takeover by Freeport- McMoRan Copper & Gold Inc.
Speculation about possible deals also helped the market. Medical-device maker Biomet Inc. and travel-reservation company Sabre Holdings Corp. rose on reports they might be acquisition targets.
“M&A is generally viewed upon as being a positive to the market,” said Steven Goldman, chief market strategist at Weeden & Co. “But the markets will likely stay relatively shallow, ebbing and flowing about whether we’ll cut rates in the first quarter.”
Light volume Monday indicated investors were a bit more cautious as they adjusted their positions before the Fed’s meeting today. The central bank raised rates 17 straight times starting in June 2004, then left them unchanged at its past three meetings.
The Dow rose 20.99, or 0.17 percent, to 12,328.48.
Broader stock indicators also advanced. The S&P 500 index rose 3.20, or 0.23 percent, to 1,413.04, and the Nasdaq composite index was up 5.50, or 0.23 percent, at 2,442.86.
Stocks appear to be heading toward double-digit gains for 2006.
