US stocks rise on China, acquisition news

US stocks rise on China, acquisition news

New York: US stocks opened mostly higher on Monday as traders were encouraged by China’s decision to maintain current interest rates despite rising inflation and amid a string of acquisitions.

The Dow Jones Industrial Average edged up 25.96 points (0.23%) to 11,436.28 by 8.35 pm, while the S&P 500 index, a broader measure of the market, climbed 4.10 points (0.33%) to 1,244.54.

The tech-rich Nasdaq was up 4.88 points (0.18%) to 2,642.42.

News that Chinese policymakers had over the weekend decided not to raise interest rates despite data showing inflation has reached 5.1%, bolstered confidence.

At the close of the Central Economic Work Conference, China’s leaders pledged to ensure “stable and healthy" economic development and to manage inflation expectations in an “active and stable way" in 2011.

Traders feared that a rise in Chinese interest rates would slow growth, dragging global trade with it.

“Investor sentiment has received a shot in the arm this morning, with a slew of merger and acquisition activity, as well as clarity on Chinese monetary policy, which doesn’t include an interest rate hike," said Joseph Hargett of Schaeffer’s Investment Research.

Trade was also boosted by corporate merger and acquisition news.

The world’s second-largest computer maker Dell will acquire data storage company Compellent for 820 million dollar as it eyes the rapidly growing cloud-computing market.

Dell shares slumped 2.6% and Compellent stocks declined three percent on Monday morning.

And Thermo Fisher Scientific, the world’s largest maker of lab instruments, announced it will acquire Dionex for about 2.1 billion dollars in cash to expand its water analysis business in China. Thermo Fisher Scientific shares rose 3.3% while Dionex saw its stocks soar 20.5%.

Also, General Electric agreed to buy British oilfield services company Wellstream Holdings for 1.3 billion dollars. GE shares were down 0.40%.

In the bond market, yields on 10-year treasuries were expected to spike as Congress moved closer to approve the extension of controversial tax cuts deal hammered out between President Barack Obama and his Republican rivals.

The yield on the 10-year Treasury bonds rose to 3.34% from 3.30% on Friday, while that of the 30-year bond advanced to 4.44% from 4.42%. Bond prices and yields move in opposite directions.