US STOCKS-Wall Street gets lift from merger activity, earnings

Wed Jul 16, 2014 10:39am EDT

* Intel climbs on earnings, outlook

* Bank of America profit drops; stock slips

* Time Warner rebuffs $80 bln bid from 21st Century Fox

* Indexes up: Dow 0.27 pct, S&P 0.31 pct, Nasdaq 0.43 pct (Updates to open; adds quote, data)

By Chuck Mikolajczak

NEW YORK, July 16 (Reuters) - U.S. stocks advanced on Wednesday and the Dow surged to a new intraday high, buoyed by the latest merger news, as investors sorted through the latest batch of corporate earnings.

Merger and acquisition activity continued to thrive on Wall Street. Time Warner shares jumped 18.1 percent to $83.87 as the biggest boost to the S&P 500 after Twenty-First Century Fox confirmed it made an $80 billion takeover offer for the company that was turned down. Twenty-First Century Fox shares lost 1.7 percent to $33.54.

Also supporting gains was chipmaker Intel, which climbed 6.2 percent to $33.69 following second-quarter results that topped analysts' estimates. The company also forecast third-quarter revenue above Wall Street's expectations.

"It's a combination of M&A that has been pretty consistent - about every day we wake up to at least one, if not two deals - and earnings have continued to be good," said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia.

"Things have started off pretty well, we haven't seen a whole lot outside of the financials but the few we have seen have been pretty good."

A partnership struck between IBM and Apple Inc also helped boost indexes. A deal was struck between the tech giants in which IBM will exclusively sell iPhones and iPads loaded with applications geared at enterprise clients this fall. IBM shares gained 1.6 percent to $191.43 as the Dow's biggest boost while Apple advanced 1.1 percent to $96.36.

The S&P technology sector gained 0.9 percent.

Bank of America lost 2.1 percent to $15.48 after the second-largest U.S. bank by assets reported a 43 percent drop in second-quarter profit as mortgage revenue fell and litigation costs increased.

Yahoo shares also declined, slumping 4.4 percent to $34.03 after disappointing second-quarter results and outlook, although the company pledged to pay its shareholders at least half the proceeds from Alibaba Group Holding Ltd's IPO-BABA.N mega-IPO this fall.

In other merger news, Italy's GTECH will buy U.S. slot machine maker International Game Technology for $6.4 billion including debt. IGT shares jumped 8.8 percent to $16.86.

The Dow Jones industrial average rose 46.1 points or 0.27 percent, to 17,106.78, the S&P 500 gained 6.09 points or 0.31 percent, to 1,979.37 and the Nasdaq Composite added 19.19 points or 0.43 percent, to 4,435.58.

Producer prices rose 0.4 percent in June against expectations calling for a 0.2 percent increase, with gains across most categories, indicating some inflation at the factory gate.

Other data showed industrial production edged up 0.2 in June, but fell short of the 0.4 percent estimate. The National Association of Home Builders/Wells Fargo housing market index rose to 53 in July, a six-month high, from 49 in the prior month.

After the closing bell, results are due from S&P 500 companies including eBay and SanDisk.

S&P 500 companies' profits are expected to grow 5.2 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.2 percent. (Editing by Bernadette Baum)

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