Stock Market News for June 10, 2014 – Zacks Investment Research

Merger and acquisition activities and a rally in small-cap stocks propelled benchmarks to record highs on Monday. New deals between Analog Devices and Hittite, Hillshire Brands and Tyson Foods, and Merck and Idenix lifted investor sentiment. Meanwhile, news that Carl Icahn has a 9.4% stake in Family Dollar was also a catalyst. The S&P 500 ended at another high; the nineteenth one this year. The blue-chip index closed at a record level for the ninth time this year.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) gained 0.1% to close Monday’s trading session at 16,943.10. The Standard & Poor 500 (S&P 500) went up almost 0.1% to finish at 1,951.27. The tech-laden Nasdaq Composite Index advanced 0.3% to 4,336.24. The fear-gauge CBOE Volatility Index (VIX) went up 3.9% to settle at 11.15. Total volume on the New York Stock Exchange was 2.8 billion shares. Advancers outpaced declining stocks on the NYSE. For 59% stocks that advanced, 37% declined.

Merger and acquisition activity boosted investor sentiment. Shares of semiconductor company Analog Devices, Inc. (NASDAQ:ADI) jumped 5.0% after the company agreed to acquire Hittite Microwave Corporation (NASDAQ:HITT) for about $2 billion. The chip maker said that it will buy Hittite at $78 per share in cash, a premium of about 29% more than Hittite’s closing price of $60.56 on Friday. Shares of Hittite surged 28.6%.

New deals in the consumer goods and the health care sectors also added to the bullish sentiment. Shares of The Hillshire Brands Company (NYSE:HSH) surged 5.3% after Tyson Foods, Inc. (NYSE:TSN) agreed to buy Hillshire in an all-cash deal valued at $8.55 billion or $63 per share. Shares of Tyson Foods and Pilgrim’s Pride plunged 6.5% and 6.7%, respectively.

Tyson Foods had been competing with rival Pilgrim’s Pride Corporation (NASDAQ:PPC) to acquire Hillshire Brands. Tyson Foods’ offer price of $63 per share came in after Pilgrim’s Pride raised its offer to $55 per share on June 3, which values the company at $6.7 billion. On May 29, Tyson Foods had initially offered to buy the maker of Jimmy Dean sausage for $6.8 billion or $50 per share in cash. The offer was more than Pilgrim’s Pride offer to buy Hillshire in an all-cash deal valued at $6.4 billion or $45 per share on May 27.

In another development, Merck & Co. Inc. (NYSE:MRK) agreed to acquire Idenix Pharmaceuticals Inc. (NASDAQ:IDIX) for $24.50 per share, which values the company at $3.85 billion. The acquisition will give Merck access to Idenix’s treatments for hepatitis C. Shares of Idenix Pharmaceuticals more than tripled, gaining a significant 229.1%. Shares of Merck also increased 0.2%.

Separately, gains in small-cap stocks also ensured a positive finish for the benchmarks. The Russell 2000 Index of small-caps went up 0.9% on Monday. The index for small-cap stocks advanced 4.4% in the last four sessions and is now up 1.0% in 2014.

Meanwhile, investors assessed St.Louis Fed President James Bullard and Boston Fed President Eric Rosengren’s comments. James Bullard said he believes the economy is moving closer to its two major goals of maximum employment and stable prices. He stated that inflation is now “moving higher”, a significant shift from his earlier comment. Last month, he stated that inflation was stable.

Eric Rosengren, a nonvoting member of the policy committee, stated that a cautious and predictable exit plan is the best way forward in order to evade market concerns over higher interest rates.

Six out of 10 sectors of the S&P 500 ended in the green. The SPDR S&P Homebuilders ETF (XHB) led the advance among the S&P 500 sectors. The sector gained 1.1%. Key housing stocks from the sector such as DR Horton Inc. (NYSE:DHI), Lennar Corp. (NYSE:LEN), Toll Brothers Inc. (NYSE:TOL), KB Home (NYSE:KBH), Beazer Homes USA Inc. (NYSE:BZH) and PulteGroup, Inc. (NYSE:PHM) increased 0.8%, 0.4%, 1.1%, 1.1%, 0.7% and 0.5%, respectively.

The Industrial Select Sector SPDR (XLI) gained 0.5%, the second highest among the S&P 500 sectors. Key stocks from the sector such as General Electric Company (NYSE:GE), United Technologies Corp. (NYSE:UTX), Union Pacific Corporation (NYSE:UNP) and 3M Company (NYSE:MMM) increased 0.9%, 1.0%, 1.2%, and 0.5%, respectively.

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Stock Market News for June 10, 2014 – Zacks Investment Research

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