By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Expedia, Orbitz Worldwide shares surge on merger news
NEW YORK (MarketWatch) -- U.S. stocks rallied on Thursday,
sending the S&P 500 to its highest close this year and within
shouting distance of the record close reached on Dec 29.
Optimism stemmed from news of a cease-fire agreement between
Russia and Ukraine, a pickup in oil prices and merger news, with
gains building throughout the session.
The S&P 500 (SPX) added 19.95 points, or 1%, to 2,088.48,
with eight of its 10 sectors finishing higher. Among them,
materials, technology and energy sectors stocks led the gains,
while utilities and telecoms were the only laggards.
The Dow Jones Industrial Average (DJI) jumped 110.24 points, or
0.6%, to 17,972.38, with 24 of its 30 components gaining. Cisco
Systems, Inc. was the top gainer, jumping 8.2%, while American
Express Company led laggards, falling more than 6%.
The tech-heavy Nasdaq Composite (RIXF) rose to its highest level
since 2000, aided a third straight day by a climb in the
heaviest-weighted component in the index Apple Inc., which was up
1.2% on the day.Apple has gained 6.3% over the past four days.
James Paulsen, chief investment strategist at Wells Capital
Management, said today's sharp rise follows a pattern of snapbacks
since December.
"After every pullback, we are snapping back sharply, and I
believe that is indicative of 'buy-the-dip' mentality, when people
are afraid to miss out on the rally. We are seeing too much
optimism out there and that's a concern," Paulsen said.
"This year I would not be surprised to see the S&P 500 go to
2,200 or back to 1,850, but I think we will finish the year flat,
as valuations are too high," he said.
Ed Shill, chief investment officer at QCI Asset Management,
sounded similarly cautious, saying the fundamentals don't support
any further gains.
"We expect 2015 earnings to come below last year's earnings, so
fundamentals don't support current high levels. But there are other
forces driving this market, namely money flows, because U.S. stocks
are like the best house in a bad neighborhood," Shill said.
"We expect some kind of a tradeable correction this year and
that would be best for this market," he added.
News of merger talks between travel companies Expedia, Inc.
(EXPE) and Orbitz Worldwide (OWW), which have been discussing a
$1.3 billion acquisition, sent both shares sharply higher, up 15%
and 22% respectively.
Meanwhile, weaker-than-expected economic data, released ahead of
the opening bell, were taken in stride.
Sales at U.S. retailers dropped for the second straight month,
indicating that Americans are saving rather than spending the
windfall from lower gasoline prices. Weekly jobless claims jumped
25,000 to above 300,000, higher than expected. However, the
four-week average still points to slower layoffs.
Geopolitical news continued to drive global markets. After
overnight talks in Minsk, Ukraine and Russia agreed to a cease-fire
starting Sunday, news that gave the ruble a pop and pushed stocks
in Russia 2.2% higher. European stocks rose 0.8%, even as the
situation over Greece's bid to negotiate new financing remains
unresolved. After six hours of negotiation in Brussels, eurozone
finance ministers kicked the can down the road, saying they'd keep
talking in coming days to try to come up with a plan.
Also read: What Wal-Mart got right in Canada and what Target
botched
Stocks to watch: Tesla(TSLA) shares fell 4.6% after the
electric-car maker stunned Wall Street by reporting a
fourth-quarter adjusted loss of 13 cents a share. Chief executive
officer Elon Musk said Tesla's market cap may rocket to Apple's
(AAPL) level in 10 years.
See: Four takeaways from Tesla earnings
Shares of American Express Co. (AXP) dropped 6.4% after it
announced it will end its co-branding and merchant-acceptance
agreement in the U.S. with Costco Wholesale Corp. (COST) on March
31, 2016.
Shares of Cisco(CSCO) jumped 9.4% after the
networking-technology company said fourth-quarter earnings nearly
doubled to $2.4 billion, or 46 cents a share.
Shares of Apple Inc.(AAPL) rose 1.2%, adding to a 2.3% gain from
the previous session. Carl Icahn said Thursday that he believes the
iPhone maker is actually worth $216 a share, valuing the company at
$1.3 trillion. The stock has gained nearly 15% since the start of
the year.
Whole Foods Markets Inc.(WFM) climbed 5.2% after the upscale
grocer beat analysts' earnings forecasts.
Baidu Inc.(BIDU) sank 4.5% after the Chinese search engine's
outlook missed estimates.
Shares of Zulily Inc.(ZU) tanked 27% to $14.52 a share after an
earnings and outlook miss.
Read Today's Movers & Shakers for more on notable
stocks.
Other markets: U.S. Treasurys rose, sending their yield down 3
basis points to below 2%. Oil prices (CLH5) shot up 4.6% to settle
at $51.210, and gold (GCH5) was nearly unchanged. In Asia, the
Nikkei 225 index rallied to a seven-year high as a weaker yen
supported exporters.
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