Stan Choe
US stocks are rising near their records after a couple buyout announcements helped lift the market.
The S&P 500 added 0.6 per cent and pulled within 0.3 per cent of its all-time high, which was set during the summer. The Dow Jones was up 105 points, or 0.2 per cent, while the Nasdaq composite climbed 0.9 per cent and was on track to set its own record.
The Australian sharemarket is set to rise, with futures at 5am AEDT pointing to a rise of 22 points, or 0.3 per cent, at the open. The ASX closed flat on Monday. The Australian dollar is higher at US69.69¢
One of Wall Street’s strongest gains came from PTC, which leaped 34 per cent for the biggest move in the S&P 500. Schneider Electric of France said it would pay $US205 in cash for each of the software company’s shares in a deal valuing it at about $US22.6 billion ($32.4 billion).
That helped lift prices for other stocks in the software industry, and Autodesk rose 5.6 per cent.
RXO, meanwhile, jumped 21.9 per cent after C.H. Robinson Worldwide said it would buy the truck brokerage business in a deal where RXO investors could get $US30.25 in cash for each of their shares. C.H. Robinson fell 12.1 per cent for the largest loss in the S&P 500.
Trading was otherwise relatively quiet as the wait continues for the start of the latest earnings reporting season. Analysts have big expectations for how much profit companies made from July through September. They’re forecasting growth of nearly 30 per cent from a year earlier for companies in the S&P 500, according to FactSet. If they’re correct, it would be the third straight quarter of growth above 25 per cent for the index.
Such strong growth and the expectation for more are what have allowed stocks to rally near records despite a long list of worries and challenges.
Monday’s moves came as the oil market continued to swing because of uncertainty about when the war with Iran will allow the global crude industry to return to normal. The price for a barrel of Brent crude veered between $US100 and $US103 in the morning and was most recently at $US100.88, down 1.3 per cent.
Worries about high oil prices have helped push up yields in the bond market, and the 10-year US Treasury yield rose to 5.33 per cent from 5.28 per cent late Friday. It’s near its highest level since 2002.
High yields can slow the economy by making it more expensive for everyone to borrow money, while also making investors feel less willing to pay high prices for stocks and other investments.
Another factor that’s been pushing up yields is the strength of the US economy, which is benefiting from big spending by businesses on AI data centres. US consumers also continue to spend and drive the economy, even though they say they’re getting more frustrated by the high inflation that’s squeezing their finances.
A report on Monday gave a mixed update on the strength of the US economy. It said that activity for real estate, transportation, finance and other businesses in the services industries grew in September for a 27th straight month. But the growth was not quite as strong as economists expected.
The report from the Institute for Supply Management also said that prices US services businesses are paying for materials and services grew at a faster rate, which could be a discouraging signal for upcoming inflation for everyone.
The general expectation on Wall Street is that the Federal Reserve will hike its main interest rate at least once by the end of the year in hopes of reining in the fast increases for the cost of living. The Fed raised its federal funds rate last month for the first time in three years.
In stock markets abroad, France’s CAC 40 fell 0.8 per cent for one of the world’s bigger losses. Worries have been rising about the French government’s big debt and its strained budget.
On the winning side of the globe was Japan, where Tokyo’s Nikkei 225 jumped 2.4 per cent on strength for technology stocks.
AP
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