Biotech Values

[DewDiligence]

Russell 2000 Closes at 4-Year High

http://online.wsj.com/article/SB10001424052748703806304576232232489611802.html

›Deal Optimism Boosts Stocks

MARCH 30, 2011, 4:21 P.M. ET
By BRENDAN CONWAY And KRISTINA PETERSON

NEW YORK—Telecommunications stocks led U.S. indexes higher Wednesday, as optimism over deal activity added to confidence jobs data would continue pointing to a strengthening labor market.

The Dow Jones Industrial Average gained 71.60 points, or 0.6%, to 12350.61, its eighth gain in ten trading days. The measure was led by AT&T, which gained 2.2% after Chief Executive Randall Stephenson said he expects some divestitures as his company pursues a $39 billion buyout of T-Mobile USA from Deutsche Telekom.

The Standard & Poor's 500-stock index rose 8.82, or 0.7%, to 1328.26 [just a hair below the 2011 high]. The Nasdaq Composite gained 19.90, or 0.7%, to 2776.79.

The Russell 2000 small-capitalization index finished at its highest close of the year and its highest since October 2007, gaining 10.88, or 1.3%, to finish at 840.37.

"The evidence continues to mount that the economy is in recovery mode," said Jack McPherson, portfolio manager at Eagle Small Cap Core Value Fund, noting that small-cap stocks tend to outperform their larger counterparts coming out of a recession.

Investors taking their money out of fixed income to wade into stocks may also be boosting small-caps, he said. Still, at a time of global fragility, it is somewhat surprising people are willing to invest in riskier assets, he said. With their lower cash reserves and higher volatility, small-cap stocks are generally considered riskier than their larger counterparts.

"Given the geopolitical backdrop, given what's going on in Europe, you'd think aversion to risk might be higher," Mr. McPherson said.

Stocks continue to break through technical levels as central banks continue to pour money into the economy. Also, ADP sees strong U.S. jobs growth in March. Mike Casey, John Shipman and Paul Vigna report.

In other deal news, Valeant Pharmaceuticals made a $5.7 billion bid for biopharmaceutical group Cephalon. Valeant CEO J. Michael Pearson said on a conference call that he was open to giving a "bump" to the offer if the due-diligence process reveals more value. Cephalon's stock surged 28%, and Valeant's rose 13%. [It’s somewhat surprising that VRX was up so much.]

Investors said the market was also looking ahead with more confidence to Friday's key government jobs report, following encouraging data Wednesday morning.

Automatic Data Processing said U.S. private-sector payrolls increased by 201,000 jobs in March, just below the expected 205,000. Half the gains in the ADP report came from small businesses. The figure was "consistent with a gradual if uneven decline in the employment rate," the report said.

"The market's showing its hand very clearly here: They want this number Friday to be through the roof," plus revisions to previous figures, Todd Colvin, vice president at MF Global said. "The jobs number is really what's driving the trade here."

Among stocks in focus, Visa added 2.8% and Mastercard gained 0.8% as expectations grew that rules limiting debit-card swipe fees will be delayed. Federal Reserve Chairman Ben Bernanke sent a letter to Congress on Tuesday acknowledging the Fed was unlikely to meet an April 21 deadline to set final rules for the fees.

Mattress maker Sealy sank 3.6% after swinging to a fiscal first-quarter loss; the result fell short of expectations. The company also reported lower sales volumes and prices on Posturepedic products ahead of the launch of a new line.

Oxford Industries jumped 34% after the apparel company's fiscal fourth-quarter earnings rose sharply. The company also announced an 18% increase to its quarterly dividend.

BlackRock is slated to replace Genzyme in the S&P 500 index, as the biotechnology company is set to be acquired, Standard & Poor's said Tuesday. Shares in the money manager, the world's biggest, rose 6.6%.

Salesforce.com jumped 5.6% after agreeing to buy monitoring firm Radian6 for about $326 million in stock and cash in its largest deal ever, continuing an aggressive push to keep its software platform apace with social-media trends.

MicroStrategy Inc. added 8.7% after saying it has been selected by Groupon to analyze the company's daily deals, examining the types of goods and services purchased, discounts offered, locations and purchaser demographics.‹