New York – Wall Street advanced Tuesday ahead of the July 4 holiday as investors drew confidence from a smaller-than-expected dip in factory orders and new merger-and-acquisition activity.
The market was relieved to hear from the Commerce Department that U.S. factories saw demand dip in May by just 0.5 percent; most analysts had predicted a decline of more than 1 percent.
Takeover news gave the market an extra boost.
Kraft Foods Inc. said it offered $7.2 billion to buy the biscuit division of French food company Groupe Danone SA.
Canadian miner Teck Cominco Ltd. bid $3.87 billion for Canadian copper miner Aur Resources Inc.
A major Wendy’s International Inc. shareholder said he is considering buying the hamburger chain.
The M&A activity helped the stock market extend Monday’s steep gains, but most analysts aren’t taking this week’s movements too seriously, given that trading volumes are low. The stock market closed early, at 11 a.m. MDT.
“Historically, the two days leading up to the July Fourth holiday have been positive for the equity markets,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. Investors shouldn’t breathe a sigh of relief yet; the few days after July 4 are often negative, he said, and the market’s recent choppiness is expected to continue.
“In general, volatility levels have been rising over the last couple of weeks. You’re likely to see a pickup in volatility in the third quarter,” Sheldon said.
The Dow Jones industrial average rose 41.87, or 0.31 percent, to 13,577.30, adding to Monday’s 126.81-point gain.
Broader stock indicators also climbed. The Standard & Poor’s 500 index gained 5.44, or 0.36 percent, to 1,524.87, and the Nasdaq composite index lifted 12.65, or 0.48 percent, to 2,644.95.
Bonds fell after the better-than-anticipated factory-orders data. The yield on the benchmark 10-year Treasury note rose 5.04 percent from 4.99 percent late Monday.
The financial sector helped lead stocks higher Tuesday, with Merrill Lynch & Co. and JPMorgan Chase & Co. each rising more than 1 percent and Goldman Sachs Group Inc. climbing 2.5 percent.
Airline stocks also jumped after Continental reported stronger-than-expected growth in June unit revenue. Continental climbed 11.1 percent; American parent AMR Corp. rose 4.8 percent; and US Airways Group rose 7 percent.
