By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
[Editor's note: A prior version of this story contained an
incorrect Tuesday close for the Dow industrials, and also gave an
incorrect reporting day for Citigroup Inc.]
NEW YORK (MarketWatch) -- The Dow Jones Industrial Average
closed at a record level on Wednesday for the 15th time this year,
as better-than-expected corporate earnings and deal talk lifted
broader markets.
The Federal Reserve's Beige Book, which said that economic
conditions and labor markets showed improvement across the country
into early July, gave stocks a late lift.
The S&P 500 (SPX) closed 8.29 points, or 0.4%, higher at
1,981.57. The Dow Jones Industrial Average (DJI) added 77.52
points, or 0.5%, to 17,138.20.
The Nasdaq Composite (RIXF) gained 9.58 points, or 0.2%, to
4,425.97.
But while S&P component Time Warner Inc. surged on news that
it had rejected a bid from 21st Century Fox Inc., biotech and
Internet stocks sold off for the second day, after a report from
the Federal Reserve on Tuesday raised concerns about their
valuations. The iShares Nasdaq Biotechnology ETF (IBB) fell 1.6%,
while the Global X Social Media Index ETF (SOCL) gave up 0.4%.
Federal Reserve Chairwoman Janet Yellen concluded her two-day
appearance testifying on Capitol Hill. In her comments, she
stressed a softer line on stock valuations, saying the Fed doesn't
have a target for equity values. The central bank instead looks to
see if valuations are outside historical norms.
"In that sense, I am not seeing alarming warning signals," she
said Wednesday. Read the recap of Yellen's testimony on this live
blog.
Also read: Jim Cramer is wrong -- the Fed should talk
valuations
But most of investors' attention was on earnings and M&A
news.
Time Warner Inc. (TWX) shares jumped 17% as the media company
confirmed it had rejected an $80 billion offer from 21st Century
Fox (NWS).
"The news about Time Warner's rejection of a takeover bid by
21st Century Fox signals that corporations are healthy and see
value in assets that the public markets do not see. And if
companies deliver on 5% earnings growth estimate, then current
multiples and prices on the S&P 500 are justified," said Joe
Peta, managing director at Novus, a financial technology
company.
Also read: Fox's bid for Time Warner may be a buy signal for
Viacom
Intel Corp.(INTC) jumped 9.3% after the technology maker
reported market-pleasing results late Tuesday, while disappointment
over Yahoo Inc.'s(YHOO) results left those shares down 5.1%.
HCA Holdings Inc.(HCA) leapt 10% as the hospital operator raised
its earnings guidance for the second quarter and full year. For
more on today's movers, read our Mover and Shakers column.
Online-auction provider eBay Inc.(EBAY) reports after the close
of markets on Wednesday.
European stocks, commodities rise
Across other markets, Hong Kong's Hang Seng closed at a one-week
high. China's economic growth rate hit 7.5% in the April-June
quarter. While that topped expectations, it still triggered
discussion about whether the government will offer up more
stimulus.
European stocks were boosted by that Chinese data. Crude oil
futures (CLQ4) bounced back from two-month lows, adding to gains
after a government supply report showed a larger-than-expected drop
in inventories. Gold futures (GCQ4) inched fractionally higher
after a three-day skid, yet stayed below $1,300 an ounce. The
dollar (DXY) pushed higher.
More must-reads from MarketWatch:
There's a big hole in the bull case for stocks
9 reasons Apple's stock price will keep rising
Delamaide on where the right and left agree on Obama
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