While you were sleeping: Stocks rise on tech takeover

While you were sleeping: Stocks rise on tech takeover

(BusinessDesk) April 6 - Equities received a boost from another multibillion dollar takeover and comments by the Federal Reserve about the potential for an interest rate increase as early as this year.

In early afternoon trading on Wall Street, the Dow Jones Industrial Average rose 0.18%, the Standard & Poor’s 500 Index gained 0.20% and the Nasdaq Composite Index climbed 0.31%.

A rebalancing of the Nasdaq 100, which takes effect on May 2, saw demand for stocks with increased weightings, including Microsoft Corp, Intel Corp and Cisco Systems Inc. While the weighting of Apple Inc was reduced, the stock will remain the index’s largest component.

In the latest takeover deal, Texas Instruments late Monday offered to buy National Semiconductor in a deal worth US$6.5 billion. Investors expect there’s more to come.

"Tech stocks are leading this big wave of merger and acquisition activity, which people are trying to position themselves ahead of and which I expect to continue," James Swanson, chief investment strategist at Boston-based MFS Investment Management, told Reuters.

In Europe, the Stoxx 600 rose 0.2%, boosted by gains in technology companies including STMicroelectronics NV and Infineon Technologies AG.

Meanwhile, Fed policy makers last month raised the possibility that interest rates could rise as early as this year.

“A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011,” the Federal Open Market Committee said in minutes of its March 15 meeting, released today in Washington.

Some members said the central bank should cut short its US$600 billion bond-buying program if growth proved more robust or inflation higher, while several others saw no need to make adjustments.

While officials concluded that higher inflation due to rising energy and commodity prices would mostly be temporary, they would remain vigilant.

"A significant increase in longer-term inflation expectations could contribute to excessive wage and price inflation, which would be costly to eradicate," the minutes said.

U.S. Treasuries fell after the Fed’s minutes were released. Yields on benchmark 10-year notes rose seven basis points to 3.49%.

Yields on Portuguese bonds hit the highest level since the euro’s introduction after rating agency Moody's lowered Portugal's sovereign debt by one notch, saying the incoming government would urgently need to seek financial aid from the European Union.

Yields on Portugal's 10-year government bonds climbed as high as 9.033%.

Brent crude rose, climbing for a fourth straight session and reaching a 2-1/2 year high.

Brent crude for May advanced 90 cents to US$121.96 a barrel by 1.40pm ET. Earlier it rose as high as US$122.89.

Even so, U.S. May crude slipped 60 cents to US$107.87, after yesterday rising to the highest level since September 2008.

(BusinessDesk)

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