(Bloomberg) — U.S. stocks rose amid corporate deals after the Standard & Poor’s 500 Index tumbled the most in two months on Friday.
Macerich Co. climbed 7 percent after a buyout offer from Simon Property Group Inc. valued at about $22.4 billion, including debt. RTI International Metals Inc. soared 39 percent after Alcoa Inc. agreed to acquire it for about $1.26 billion.
The S&P 500 advanced 0.4 percent to 2,079.43 at the close in New York, as equities entered the seventh year of a bull run. The Dow Jones Industrial Average added 138.94 points, or 0.8 percent, to 17,995.72. About 6.2 billion shares changed hands on U.S. exchanges, 11 percent below the three-month average.
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“The Monday morning news is typically deal related,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a telephone interview. “Two or three today that are somewhat noteworthy. That’s always encouraging — that companies are finding value in other companies. There’s a little better feeling about the world and Europe as far as economic growth and stability.”
Concern the Federal Reserve may start raising interest rates this year amid a strengthening economy has dragged equities lower. The S&P 500 fell 1.6 percent last week, the most since January, as data showed the jobless rate reached the central bank’s range for what it considers full employment. Policy makers next meet on March 17-18.
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The S&P 500 is up 1 percent this year, after rallying 11 percent in 2014 and 30 percent in 2013. The benchmark measure is trailing all but two of 24 developed markets this year, data compiled by Bloomberg show.
The index has more than tripled from its bear-market low on March 9, 2009, buoyed by three rounds of Federal Reserve bond-buying and low interest rates. The gauge hasn’t had a 10 percent drop since 2011, posting more than 50 closes at all-time highs in the past year.
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The current run, lasting almost 2,200 days, is about two months away from overtaking the 1974-1980 bull market as the third-longest since 1929. After the S&P 500, Dow Jones Industrial Average and Russell 2000 Index all hit records on March 2, and the Nasdaq Composite Index climbed above 5,000 for the first time since 2000.
At 18.6 times earnings, the S&P 500’s valuation is near a five-year high and compares with an average of 16.9 since 1936, data compiled by Bloomberg and S&P Dow Jones Indices show.
Warnings that stocks are in a bubble and that breadth is narrowing are signs that the thing that really kills bull markets, euphoria, has yet to surface, Laszlo Birinyi, the president of Birinyi Associates Inc. in Westport, Connecticut, said in a phone interview.
“We still see continuous negativity,” Birinyi said. “A lot of people have missed and they’ve been wrong. It’s hard to one day turn around and say ‘I was wrong.’ Ultimately, the market continues to surprise on the upside.”
Reports this week may show an improvement in U.S. retail sales, consumer sentiment and industrial production, and a drop in jobless claims, economists forecast.
Eight of the S&P 500’s 10 main groups advanced, led by industrial and health care companies.
The Chicago Board Options Exchange Volatility Index lost 0.9 percent to 15.06. The gauge, know as the VIX, rose 14 percent last week, its biggest jump in five weeks.
Macerich climbed 7 percent after Simon Property, the largest U.S. mall owner, offered to buy the company in a cash-and-stock transaction valued at about $22.4 billion, including debt. Simon slid less than 0.1 percent.
RTI International soared 39 percent to its highest level since July 2011 after Alcoa agreed to buy the company in an all-stock transaction valued at about $1.26 billion. Alcoa fell 5.4 percent to its lowest since June.
It’s the third aerospace-related deal announced by Alcoa in less than nine months, an area where it sees growth potential outpacing other aluminum-using sectors such as cars and construction.
Aerospace and defense stocks in the S&P 500 added 1.2 percent, led by gains of at least 1.5 percent in Raytheon Co. and United Technologies Corp.
General Motors Co. rose 3 percent after announcing a $5 billion share buyback program on Monday. Activist investor Harry J. Wilson will give up his request for a board seat after reaching an agreement with the automaker.
Whiting Petroleum Corp. jumped 11 percent as people familiar with the matter said the oil producer has hired a bank to pursue a potential sale.
Apple Inc. climbed 0.4 percent, paring an earlier advance of as much as 2.4 percent, after the company presented new products and services at an event in San Francisco, including a smartwatch and an exclusive Apple TV partnership with Time Warner Inc.’s cable channel HBO for its stand-alone service.
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- Simon Property Group Inc.
- Alcoa Inc.
- Federal Reserve
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