Wave of deals leads US stocks higher
US stocks have risen as investors were cheered by a spate of corporate deal-making over the weekend.
Technology companies made the biggest gains, but investors were doubtful the biggest deal, AT&T's agreement to buy Time Warner, will happen.
Companies announced almost 100 billion dollars (£81 billion) in deals over the last few days. Investors had mixed reactions to the moves, but they were pleased the companies were willing to spend.
"Any time you see a lot of IPOs, a lot of merger activity, it boosts confidence," said Karyn Cavanaugh, senior markets strategist for Voya Investment Strategies.
Big-name technology companies including Apple and Alphabet, which owns Google, rose ahead of reporting their earnings this week. Amazon also rose, giving other consumer companies a boost.
Energy companies slipped with the price of oil.
The Dow Jones industrial average gained 77.32 points, or 0.4%, to 18,223.03. The Standard & Poor's 500 index rose 10.17 points, or 0.5%, to 2,151.33.
Thanks to the big gains for tech companies, the Nasdaq composite climbed 52.42 points, or 1%, to 5,309.83.
Over the weekend telecom giant AT&T agreed to pay 85.4 billion dollars (£70 billion) for Time Warner, the entertainment conglomerate that owns HBO, CNN and Warner Bros.
Time Warner jumped almost 8% on Friday but remains far below the 107.50 dollars a share AT&T agreed to pay.
Both presidential tickets have already expressed scepticism about the deal and it is not clear if regulators will let the companies combine.
The concern is that the combined company might favour its own media properties at the expense of those owned by rivals. In recent months the government has stepped in to stop a series of big deals, including two major health insurance mergers.
"Any deal is seen as reducing competition and unfair to the consumer," said Ms Cavanaugh, who added there can be major benefits to such deals.
For their part, investors also worried about the price AT&T is paying. The company, which bought DirecTV for 48.5 billion dollars last year, already has about 117 billion dollars in long-term debt.
AT&T fell 63 cents, or 1.7%, to 36.86 dollars while Time Warner lost 2.74 dollars, or 3.1%, to 86.74 dollars.
Elsewhere, aviation electronics company Rockwell Collins agreed to buy commercial aircraft and business jet maker B/E Aerospace for 62 dollars a share, or 6.4 billion dollars in cash and stock. B/E Aerospace climbed 8.28 dollars, or 16.4%, to 58.89 dollars, while Rockwell Collins gave up 5.25 dollars, or 6.2%, to 79.21 dollars.
Tech stocks have done very well over the last few months and that could continue as more companies report their earnings. S&P Global Market Intelligence says analysts think earnings for tech companies will grow 6% in the third quarter. Overall earnings for companies in the S&P 500 index are expected to rise less than 1%.
Microsoft, which is trading at all-time highs after strong earnings last week, rose 1.34 dollars, or 2.2%, to 61 dollars. Alphabet picked up 11.68 dollars, or 1.4%, to 835.74 dollars, and Apple added 1.03 dollars to 117.63 dollars.
TD Ameritrade will combine with competitor Scottrade at a time when investors are choosing index funds over stock picking. In a related transaction, TD Bank will also combine with Scottrade Bank. The two deals were valued at 4 billion dollars together. TD Ameritrade slid 1.62 dollars, or 4.4%, to 35.46 dollars.
China Oceanwide Holdings agreed to buy Genworth Financial for 5.43 dollars per share, or 2.7 billion dollars. The financial services firm traded at 25 dollars a share at the end of 2007, before the financial crisis, and its stock has not recovered. It has taken steep losses the last few years and on Monday it lost 42 cents, or 8.1%, to 4.79 dollars.
Benchmark US crude lost 33 cents to 50.52 dollars a barrel in New York after falling more than 2% earlier in the session. Brent crude, the international standard, fell 32 cents to 51.46 dollars a barrel in London.
Wireless carrier T-Mobile jumped after reporting better-than-expected results and raising its forecasts for new customers. T-Mobile gained 4.44 dollars, or 9.6%, to 51.19 dollars. It had not traded above 50 dollars a share since October 2007.
Consumer companies also did better than the broader market. Amazon picked up 10.10 dollars, or 2.3%, to 838.09 dollars, and PepsiCo rose 1.69 dollars, or 1.6%, to 107.31 dollars.
Consumer products maker Kimberly-Clark fell 5.67 dollars, or 4.7%, to 113.91 dollars for its biggest loss in more than a year. The maker of consumer products such as Huggies nappies and Kleenex tissue reported weak results for the quarter and cut its annual sales forecast. The stock reached all-time highs in early July but has fallen 17% since then.
The dollar rose to 104.24 yen from 103.85 yen. The euro edged up to 1.0879 dollars from 1.0871 dollars.
Bond prices slipped. The yield on the 10-year Treasury note rose to 1.76% from 1.74%.
In other energy trading, wholesale fuel dipped 3 cents to 1.50 dollars a gallon. Heating oil remained at 1.58 a gallon dollars. Natural gas dropped 16 cents, or 5.4%, to 2.83 dollars per 1,000 cubic feet.
Gold lost 4 dollars to 1,263.70 dollars an ounce and silver rose 1 cent to 17.60 dollars an ounce. Copper remained at 2.09 dollars a pound.
Germany's DAX gained 0.5% and the CAC 40 in France added up 0.4%. The FTSE 100 in Britain lost 0.5%. Hong Kong's Hang Seng jumped 1% while Japan's Nikkei 225 rose 0.3% and the Kospi in South Korea climbed 0.7%.