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Wall Street set to open higher on deal speculation

US stocks were poised to open higher on Monday, boosted by deal news including a report that BHP Billiton has revived plans for a $40 billion takeover of aluminum producer Alcoa Inc.

business Updated: Jun 18, 2007 19:17 IST
Kristina Cooke

US stocks were poised to open higher on Monday, boosted by deal news including a report that BHP Billiton has revived plans for a $40 billion takeover of aluminum producer Alcoa Inc.

Shares of Alcoa rose 2.4 per cent in trading before the bell after the Times newspaper in London reported BHP Billiton Ltd/Plc, the world's biggest mining group, may bid for the aluminium producer.

General Electric Co and Pearson Plc may challenge News Corp's $5 billion bid for Dow Jones & Co with a plan that could let Dow Jones's controlling Bancroft family keep an interest in the company, the Financial Times and The Wall Street Journal reported on their websites.

Shares of Dow Jones rose 1.7 per cent to $60 in trading before the bell.

Benchmark 10-year bond yields retreated further from a five-year peak of 5.33 per cent hit last week, lending stocks further support. Bond prices and yields move inversely.

"Before there was concern about rising bond yields, the market was mainly moving on merger & acquisition news, so M&A could be a driver again today," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

"And with very little big economic news, if bond yields continue to move slightly lower, stocks will move higher."

S&P 500 futures were up 4 points, above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were up 37 points while Nasdaq 100 futures were up 3 points.

Shares of Apple Inc rose 2.7 per cent to $123.70 in electronic trading on Monday after the computer maker said its new iPhone will deliver significantly longer battery life when it starts to ship on June 29.

Shares of Gilead Sciences Inc rose 1.4 per cent to $82 before the bell after a new pill for a debilitating and often life-threatening lung disease won approval from US health officials on Friday.

Shares of Genesco Inc rose more than 9 per cent to $54.15 in electronic trade on Monday after athletic shoe retailer Finish Line Inc said it agreed to buy the shoe and hat retailer for $54.50 per share or about $1.5 billion.

Rival bidders for CBOT Holdings Inc, the second-biggest US futures market, are considering raising their offers a third time, according to a report by Bloomberg news wire. Chicago Mercantile Exchange Holdings Inc contacted CBOT shareholders about a possible higher bid last week, Bloomberg said on its website.

In other corporate news, investment bank Merrill Lynch has seized $400 million in assets of a troubled hedge fund at Bear Stearns Cos Inc, the Wall Street Journal reported in its weekend edition.

Alcoa shares rose to $42.61 before the bell, from a close of $41.60 on Friday on the New York Stock Exchange.

Shares of Cadence Design Corp fell 4.9 per cent to $22.15 in electronic trading after the New York Times reported that talks aimed at a possible takeover by two private equity firms of the maker of software for designing computer chips have stalled over price.

US stocks rose for a third straight day on Friday, after tame consumer price data eased inflation concerns.