Created on Monday, 09 September 2013 Written by JOSHUA FREED, AP Business Writer
The stock market got a boost on Monday from mergers, homes, and phones.
Two big deals suggested growing confidence in the economy: Luxury retailer Neiman Marcus was sold for $6 billion, and Koch Industries bought electronics component maker Molex for $7.2 billion.
Apple rose. It's expected to announce a new iPhone on Tuesday.
Homebuilding stocks were some of the biggest gainers in the Standard & Poor's 500 index after Hovnavian Enterprises said home prices are rising and its backlog jumped almost 27 percent from a year earlier.
Hovnanian rose 12 cents, or 2.4 percent, to $5.16. PulteGroup, D.R. Horton and Lennar also gained. Homebuilder MDC Holdings rose $1.65, or 6 percent, to $29.30 after an upgrade from a Citi analyst.
Homebuilding stocks have had a volatile year. Investors have been bullish because the housing market is recovering, but worried that rising interest rates make mortgages more expensive for home buyers.
Afternoon trading put the Dow Jones industrial average up 120 points, or 0.8 percent, to 15,042. The Dow last closed above 15,000 on Aug. 23.
The S&P 500 index rose 12 points, or 0.7 percent, to 1,667. The Nasdaq composite rose 35 points, or 1 percent, to 3,695.
Among the 10 industry groups in the Standard & Poor's 500 index, only telecommunications fell.
Two things about the Koch-Molex deal grabbed investors' attention: Its components show up in a wide variety of products, including housing and autos, so Koch's interest suggests that it sees broad economic improvement. Also, Koch is paying a large premium for Molex.
Koch is paying $38.50 per share, 31 percent over Molex's stock price on Friday. Molex soared $9.19, or 31 percent, to $38.53 on Monday.
"I think it's really exciting for just about everybody to see that big of a deal go through," said Kim Forrest, senior analyst with portfolio management firm Fort Pitt Capital Group in Pittsburgh.
Apple rose back above $500 per share. It last closed above that level on Aug. 26. Apple gained $8.45, or 1.7 percent, to $506.60 on Monday.
Delta Air Lines jumped $1.41, or 7.1 percent, to $21.30 after news that it would be added to the S&P 500 index. That benefits Delta because mutual funds and other investors that track the S&P 500 will now have to buy Delta's stock. JPMorgan analyst Jamie Baker estimated that inclusion in the index will add demand for almost 89 million Delta shares.
Before U.S. trading began, Asian stocks rose, lifted by Tokyo's win for the 2020 Summer Olympics, Chinese export growth and an election victory by Australia's conservative coalition.
The coalition supports repealing a 30 percent tax on coal and iron ore miners' profits, which could help mining and other raw material companies. Mining gear maker Caterpillar rose $2.45, or 2.9 percent, to $85.84, and mining company Cliffs Natural Resources was up $1.14, or 5.2 percent, to $22.99.
In U.S. government bond trading, the yield on the 10-year Treasury note fell to 2.91 percent from 2.94 percent late Friday. It traded as high as 3 percent last Thursday, a key psychological level because the 10-year yield is the most widely used benchmark for borrowing in the U.S.
Benchmark crude oil fell 90 cents to $109.63. The euro rose to $1.327 from $1.3173 late Friday, while the dollar rose to 99.60 yen from 99.10 yen.