Stocks rise after US deal with Mexico; car companies rise
|Toronto Star 10 Jun 2019 at 06:54|
NEW YORK - U.S. stocks moved broadly higher in early trading Monday on Wall Street after the U.S. and Mexico averted a trade war and potentially damaging tariffs, while several companies inked billion-dollar deals.
The solid opening follows the strongest week for stocks since November. U.S. President Donald Trump suspended plans to impose tariffs on Mexican goods after the nations managed to strike a deal on immigration. The spat threatened to add more costs for American companies and consumers and expand a global trade war that already includes China.
Several megadeals also helped nudge stocks higher. Industrial giant United Technologies is merging with defence contractor Raytheon in a deal that will create a defence contracting powerhouse with more sales than rivals Lockheed Martin and Northrop Grumman. Meanwhile, customer-management software developer Salesforce is buying data analytics company Tableau Software in an all-stock deal valued at $15.7 billion.
Technology companies led the gains and Apple rose 1.3%. Chipmakers made some of the biggest moves, with Nvidia rising 3.6% and Qualcomm rising 2.1%.
Banks were also among the biggest gainers as lower bond prices pushed yields higher. Higher yields allow banks to make more profits from loan interest. Bank Of America rose 2.6% and Citigroup rose 2.8%.
Utilities and consumer staples lagged the market.
KEEPING SCORE: The S&P 500 index rose 0.6% as of 10 a.m. Eastern time. After a 4.4% gain last week, the benchmark index was 2.5% below its record set on April 30 as of Friday. The Dow Jones Industrial Average rose 137 points, or 0.5%, to 26,123. The Nasdaq composite rose 1%.
STRONG Defence: Raytheon rose 1.2% after the company said it will merge with United Technologies in a move that will create one of the world’s largest defence contractors.
The combined company will have sales of about $74 billion, pushing it ahead of competitors including Lockheed Martin and Northrop Grumman. Boeing, which has a significant defence segment, has annual sales of about $100 billion.
United Technologies fell 1%.
Raytheon is known for its missiles, including the Patriot system. United Technologies makes aircraft engines, among other industrial products.
In 2018 there were eight defence sector mergers exceeding $1 billion in value, including an all-stock deal between L3 Technologies and Harris and General Dynamics’ acquisition of CSRA Inc., according to PricewaterhouseCoopers.
USE THE FORCE: Tableau shares surged 35.5% after customer-management software developer Salesforce said it would buy the company in an all-stock deal valued at $15.7 billion.
Salesforce fell 4.4%.
Tableau uses self-service analytics to help people with any skill level work with data. Companies using its services include Charles Schwab, Verizon and Netflix. More software and technology companies are adding data analytics operations to bolster their offerings.
Other data companies gained ground following news of the deal. Alteryx rose 8.3%, MongoDB rose 5% and Talend rose 4.7%.
The deal comes a few days after Google said it is purchasing data analytics firm Looker for $2.6 billion in order to expand its Google Cloud business.