Dow closes at new record high, U.S. dollar jumps

Jordan News.Net
Wednesday 16th May, 2007

It was a positive day for U.S. markets Wednesday as the Dow climbed more than 100 points to a new record close.

The U.S. dollar was also back in demand.

By the end of the day the Dow Jones Industrials were up 103.69 or 0.78% at 13,487.53. It was the twenty-second record high notched up by the Dow Jones in its history, and the 8th for this month. The key index also hit an all-time record intra-day high of 13,489.57.

The Nasdaq Composite at 2,547.42 was ahead 22.13 or 0.88%, while the S&P 500 gained 12.95 or 0.86% to 1,514.14.

Takeover and merger speculation dominated trading as Edward Lampert's hedge fund announced it had picked up 15.2 million shares in the country's biggest bank, Citigroup, prompting a 4% rise in the company's shares to $54.91.

'We're still riding on a wave of merger mania in a sea of liquidity in the market,' Fred Dickson, market strategist, director of retail research at D.A. Davidson & Co. in Lake Oswego, Oregon told Reuters newsagency.

'Traders at this point are afraid to sell. They don't want to be held in a position where the stock they just sold is the next private takeover target. That seems to be the dominant theme,' he said.

Meanwhile, according to The Financial Times, George Soros, another famous hedge fund manager, said his stake in Microsoft had doubled, and the stock rose 0.55% to $31.07. Mr Soros had lowered his holdings in Oracle, and shares were up 0.8% at $18.99, while he had sold shares in Ebay, down 0.75% at $33.25, and Take-Two Interactive, and shares in the video game maker slid 0.2% at $19.08.

Another big investor, Carl Icahn, a well-known activist, said he had purchased a large slice of Anadarko Petroleum, boosting its shares by 1.6% to $47.20, and also bought shares in CSX, the railroad finished up 1.4% at $46.40. Mr Icahn also disclosed that his stake in Time Warner, had been cut by nearly half. Its shares in the media group rallied 1.55% to $21.60.

In takeover news, Bausch & Lomb agreed to be acquired by private equity firm Warburg Pincus for about $3.7bn in cash. Shares in the the maker of eye-care products jumped 9.8% to $67.50.

“We believe pressure on operating cash flow, as the company struggles to recapture lost market share, creates significant risks in terms of return on capital for an acquiring firm and we do not expect any higher offers,” Robert Gold, medical devices analyst at Standard & Poor’s Equity Research told The Financial Times.

In London weakness in property and mining stocks resulted in the key indices trading lower. One bright spot was the InterContinental Group which owns and operates the InterContinental, Crowne Plaza, and Holiday Inn hotel chains. Nearly 10% of the company's shares were traded as speculation of a takeover dominated early in the day, only to be squashed by an announcement the company was involved in a buy-back of its own shares. InterContinental stock closed up 8% on the day.

London's FTSE 100 lost 9.10 or 0.14% on the day to 6,559.50.

Elsewhere in Europe the Paris-based CAC 40 fell 31.85 or 0.53% to 6,017.91, while the German DAX slid 24.10 or 0.32% to 7,481.25.

On foreign exchange markets the U.S. dollar showed increasing signs it may have bottomed. The U.S. unit closed significantly higher on the day, its underlying strength boosted by the fact it closed near its highs.

At the close in New York the dollar was being quoted at 1.3514 against the euro and 1.9768 versus the pound. The Japanese yen weakened to 120.79, while the Swiss franc shrank to 1.2234.

The Canadian dollar was off a touch to 1.1040 while the Australian dollar was punctured by weaker-than-expected employment data to end sharply lower at .8242. The New Zealand dollar also came off, fetching around .7326 at the close.

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