Caterpillar lifts Dow, but banks limit gains

Caterpillar lifts Dow, but banks limit gains

New York: The Dow industrials rose on Monday on Caterpillar’s strong results, while weak bank shares left the broad S&P 500 index little changed.

Positive corporate earnings and a flurry of deals also pushed some stocks sharply higher.

Caterpillar Inc, the heavy machinery maker, raised its full-year profit forecast and said “economic conditions are definitely improving." The stock gained 4.6% to $71.93 and gave the biggest boost to the Dow industrials.

Bank shares fell, with Citigroup Inc down 4.1% at $4.66 after the US Treasury said it would begin selling part of the 27% stake it holds in the bank after $45 billion in taxpayer-funded bailouts.

A proposal to overhaul financial regulation was expected to face a crucial Senate test vote on Monday and weighed on financial shares. The KBW bank index fell 1.7%.

“Most of the big banks’ profits come from trading and if you restrict their trading profits, that’s going to restrict their overall profits," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California, about possible outcomes of the regulation reform.

“The regional banks will be hurt the most because they can’t make up the cost of the fees the financial reform is going to charge them."

The Dow Jones industrial average gained 24.86 points, or 0.22%, to 11,229.14. But the Standard & Poor’s 500 Index shed 1.65 points, or 0.14%, to 1,215.63. The Nasdaq Composite Index dipped 2.98 points, or 0.12%, to 2,527.17.

On the New York Stock Exchange, nearly six shares rose for every five that fell, while on the Nasdaq, advancers beat decliners by a ratio of about five to four.

Whirlpool Corp surged nearly 16% to an all-time high at $118.44, lifting the S&P consumer discretionary sector. Whirlpool, the world’s largest appliance maker, reported earnings that beat estimates and raised its full-year profit view.

A handful of deals also caught investors’ attention. Hertz Global Holdings Inc said it agreed to buy Dollar Thrifty Automotive Group Inc for about $1.2 billion, while Charles River Laboratories International, the US clinical research company, said it plans to acquire WuXi PharmaTech Inc for $1.6 billion.

Dollar Thrifty’s stock gained 9.6% to $42.56, while shares of acquirer Hertz jumped 15.4% to $14.86.

In the pharmaceutical research realm, the US-listed shares of WuXi surged 17.4% to $19.45, while the stock of acquirer Charles River Laboratories slid 13.9% to $34.23.

In the financial services sector, a stock transaction was in the news. Stifel Financial Corp will acquire rival Thomas Weisel Partners Group Inc for about $300 million in stock, the companies announced.

Stifel Financial’s stock slipped 4.1% to $53.44 on the New York Stock Exchange, while Thomas Weisel shares soared 65.6% to $7.22 on Nasdaq.

Worries over Greece’s ability to finance itself weighed on equity and other markets. Germany set tough terms to secure emergency aid for Athens, increasing uncertainty over a financial rescue that pushed the cost of insuring against a Greek debt default to a record high.

A Bank of New York Mellon index of US-traded shares of Greek companies fell 1.4%.