Google deal boosts shares for third day
NEW YORK (Reuters) - Wall Street stocks rose for a third day on Monday as investors saw Google's offer for phone maker Motorola Mobility as an excuse to jump back into the market after weeks of sharp selling.
Acquisition activity is often viewed as a sign major corporations sitting on big cash piles are willing to pay for shares even as economic growth remains sluggish.
Motorola Mobility Holdings Inc jumped 55.8 percent to $38.13 after Google offered $12.5 billion to buy the company, which would be Google's biggest deal ever. Google shares ended down 1.2 percent at $557.23.
With Monday's gains, the stomach-churning losses incurred last week have now been wiped out. Among big winners were banks, which have been a frequent target for selling. Bank of America Corp rose 7.9 percent to $7.76, making it the Dow's biggest percentage gainer.
"The shining point throughout this whole debacle is that corporate America is actually doing quite well," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco. "It shows that they're not yet ready to throw in the towel."
Shares of other cell phone companies also rose, riding hopes of additional takeovers or the possibility of business shifting to Google's competitors. Blackberry maker Research in Motion advanced 10.4 percent to $27.11 while Nokia jumped 17.4 percent to $6.29.
The S&P financial index rose 3.2 percent. Shares of Bank of America advanced after it said it plans to sell its credit card business in Canada to TD Bank Group.
Three days of market gains follow weeks of intense volatility and a sharp selloff that put the S&P 500 in negative territory for the year. After the rebound, the S&P is now down just 4.2 percent on the year.
"It's causing people to rethink their view toward the market," said Nick Kalivas, senior equity index analyst at MF Global in Chicago. "It's causing people to think more about valuation than they have in recent days."
The Dow Jones industrial average shot up 213.88 points, or 1.90 percent, to 11,482.90. The Standard & Poor's 500 Index gained 25.68 points, or 2.18 percent, to 1,204.49. The Nasdaq Composite Index climbed 47.22 points, or 1.88 percent, to 2,555.20.
Trading volume slowed from last week to 8.14 billion on Monday, down from the daily average of approximately 16 billion shares traded last week.
About 10 stocks advanced for every declining stock on the New York Stock Exchange, while roughly four stocks rose for every declining stock on the Nasdaq.
A meeting on Tuesday by French and German political leaders was expected to result in initiatives needed to restore confidence in credit and other markets.
Shares of Lowes Cos Inc were up 0.9 percent at $19.68 after it reported weaker-than-expected quarterly sales and cut its fiscal-year outlook. Wal-Mart Stores Inc and Home Depot Inc report earnings on Tuesday.
In other deal news, world No. 1 oil drilling contractor Transocean is paying double the market price for Aker Drilling to refresh its aging fleet of Norwegian drilling rigs and boost flagging orders. Transocean shares advanced 3 percent to $57.26 in New York.
(Reporting by Ashley Lau; Editing by Kenneth Barry)