By Leslie Wines, MarketWatch
Dec. 21, 2005
U.S. stocks rose at the opening Wednesday, supported by merger news as
Allergan finally sealed a deal to acquire breast implant maker Inamed.
The Dow Jones Industrial Average was up 61.39 points at 10,866.94.
The S&P 500 rose 6.20 points to 1,265.82 and the Nasdaq Composite gained
10.37 points to 2,232.79.
On Tuesday stocks gave up morning gains and closed lower as strategists
suggested the year-end rally may have peaked, while embattled General
Motors fell within striking distance of its all-time low stock price.
After Tuesday's losses, some strategists said that the year-end rally may
have run its course and that price action should be dull through the
remainder of the year.
"Everyone has been lulled into thinking that since we haven't yet had a
Christmas rally, there won't be one," said Philip Dow, director of equity
strategy at RBC Dain Rauscher. "But there are a few days left this week,
and I still think there could be a surprise rally. What we need is a
catalyst."
Early Wednesday stocks rallied despite news from the Commerce Department
that the gross domestic product increased at a 4.1% rate in the third
quarter, slightly lower than previous estimates of a 4.3% growth rate.
Economists surveyed by MarketWatch had expected growth of 4.3%.
Crude futures were higher, but well below the psychologically critical
level of $60 a barrel. The February contract last was up 23 cents at
$58.32 an ounce.
Gold futures were under pressure, as the February contract fell $2.20 to
$494.80 an ounce.
The Treasury market was under pressure, sending yields higher, despite the
weaker GDP revision. The GDP report's core personal consumption deflator,
which is carefully monitored by the bond market, was boosted to 1.4% from
1.2% annualized.
The benchmark 10-year Treasury note last was down 6/32 at 100-3/32 with a
yield of 4.490%.
The dollar was higher in the early going, rising 0.3% to 117.46 yen as the
euro fell 0.04% to $1.1820.
Stocks in play
Allergan agreed to pay more than $3 billion for Inamed, sealing a deal
that topped Medicis Pharmaceutical's earlier bid.
Inamed stock rose 1.1% to $86.76.
Seagate Technology offered $1.9 billion for Maxtor Corp. Both companies
make hard disks.
Seagate stock dropped 2.2% to $19.16 while Maxtor stock catapulted 44%
higher to $6.52.
Palm Inc. shot up 4% to $32.15. Late Tuesday the company reported
quarterly earnings that topped expectations and an 18% increase in sales.
International Business Machines, a Dow component, will buy Micromuse for
$865 million in cash.
Micromuse stock vaulted 36% to $9.80 as IBM shares rose almost 1% to
$83.26.
Elsewhere on the Dow, embattled General Motors extended its recent slide,
falling 1.7% to $19.50.
Google stock was higher after the company sealed a deal to pay $1 billion
for a 5% stake in the America Online division of Time Warner. Google last
was up 1.6% at $436.38.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
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p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
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SOURCE Thomson Financial Corporate Group
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