By Alex Barker
Published: February 13 2007 14:06 | Last updated: February 13 2007 14:06
Wall Street stocks rallied Tuesday morning on sound earnings updates, an analyst upgrade for General Motors and reports of a possible takeover approach for Alcoa, the aluminium group.
The S&P 500 was up 0.5 per cent at 1,439.85 by mid-morning. The Nasdaq Composite were up 0.4 per cent to 2,461.06
The blue-chip based Dow Jones Industrial Average rose 0.63 per cent to 12,631.94, boosted by Alcoa shares rising more than 8.6 per cent to $35.72 on rumours of a takeover.
The jump in price followed an unconfirmed report that BHP Billiton and Rio Tinto were preparing $40bn takeover approaches for the aluminium group.
The Anglo-Australian mining companies were reported by The Times to be independently preparing bids but to be at preliminary stages and yet to approach the Alcoa board.
Analysts at Merrill Lynch raised their recommendation on General Motors from a “sell” to a “buy”, lifting its shares 2.9 per cent to $36.73. Meanwhile, the brokerage reduced Ford to a “sell”, sending its shares down 2.6 per cent to $8.42 before the bell.
Shares in 3M were 2.6 per cent higher at $76.55 after the diversified technology group said after the bell on Monday that it intended to return $7bn to shareholders through a share buy-back over two years.
In earnings news, Marsh & McLennan, the insurer, reported a six-fold increase in profit in the fourth quarter from $35m to $226m, beating analysts’ estimates. Its shares were up 0.2 per cent to $29.77.
Nasdaq said its profits tripled from $17.1m to $63m in the fourth quarter on higher trading charges and gains from the 30 per cent share it has acquired in the London Stock Exchange as part of its hostile takeover attempt. Shares in Nasdaq were down 3 per cent to $34.04, following its 5.7 per cent fall on Monday.
Johnson & Johnson said after the bell on Monday that it had informed federal prosecutors and regulators that some of its units outside the US were believed to have made improper payments. Its shares were trading down 0.1 per cent at $65.36.
KB Homes said that it made fourth quarter losses of $49.6m after $343.3m of pre-tax charges for giving up land options and writing down the value of its housing stock. Its shares rose 2.6 per cent to $53.28 helped by a slight reduction in the cancellation rate from 53 to 48 per cent in the fourth quarter.
Copyright The Financial Times Limited 2007
When investing always start with an assumption that the stock market is dead wrong.
