COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

S&P 500 rises as Heinz deal overshadows global economic concern

The markets traded in a narrow range again Thursday, despite positive employment news and a major corporate acquisition.

The Dow Jones Industrial Average fell 9.52 points to 13,973.39. However, the Nasdaq Composite Index rose 1.78 points to 3,198.66 and the S&P 500 Stock Index eked out a gain of 1.05 points to 1,521.38.

The Department of Labor said initial claims for jobless benefits fell by 27,000 to 341,000. The numbers may have been impacted by last week’s severe storm that closed employment office in several Northeast states.

Shares of H.J. Heinz (NYSE: HNZ) rose $12.02 to $72.50 after it was announced the food company was being bought by an investment firm with financing provided by Warren Buffett's company, Berkshire Hathaway Inc. (NYSE: BRK.A).

Gold fell to a six-month low Thursday, down $9.60 to $1,635.50. Oil rose 30 cents to $97.31 a barrel.

Constellation Brands Inc. (NYSE: STZ) soared 37 percent after Anheuser-Busch InBev NV (NYSE: BUD) offered to cede full control of U.S. distribution for Corona beer in a bid to salvage its deal for Grupo Modelo. US Airways Group Inc. (NYSE: LCC) dropped 4.6 percent after agreeing to an $11 billion merger with AMR Corp.’s American Airlines.

“Corporate America is a little more optimistic,” Ted Harper, who helps manage about $8 billion for Frost Investment Advisors LLC in Houston, said by phone. “Companies have repositioned, they have become far leaner and are looking for opportunities to deploy capital incrementally for growth.”

Campbell Soup Co. (NYSE: CPB) climbed 1.4 percent to $38.72 while General Mills Inc. (NYSE: GIS) advanced 3.1 percent to $44.31.

About $36 billion in deals were announced Thursday, bringing the total to $145.8 billion so far this year, according to data compiled by Bloomberg. That already surpassed the total of $99.6 billion during the first two months of 2012.

“We’re positive on the fact that M&A will continue to move higher,” said Jeff Morris, the Boston-based head of U.S. equities for Standard Life Investments, in a phone interview. His firm oversees $263 billion in assets. “If we can get some clarity in Washington and if the economy continues to grow, I think you’ll see more and more companies use M&A.”

Phone stocks fell the most among S&P 500 groups Thursday, sinking 2 percent. CenturyLink Inc. (NYSE: CTL) plunged 23 percent to $32.27 after cutting its dividend by 26 percent to 54 cents a share and forecasting first-quarter sales that missed analysts’ estimates.

Cisco Systems Inc. (Nasdaq: CSCO) slipped 0.7 percent to $20.99. The company forecast third-quarter revenue will increase 4 percent to 6 percent from a year earlier, indicating revenue of $12.1 billion to $12.3 billion. Analysts on average predicted sales of $12.2 billion, according to data compiled by Bloomberg.

MetLife Inc. (NYSE: MET) retreated 2.2 percent to $36.69. The life insurer said fourth-quarter profit declined 87 percent on costs tied to lower interest rates and annuities.

General Motors Co. (NYSE: GE) fell 3.2 percent to $27.75. The automaker’s fourth-quarter profit trailed analysts’ forecasts as Europe losses weighed down the results.

Whole Foods Market Inc. (Nasdaq: WFM) dropped 9.7 percent to $87.50. The natural-foods store lowered its sales forecast for fiscal 2013. Sales may increase as much as 11 percent in fiscal 2013, compared with a previous estimate for growth of as much as 12 percent, Whole Foods said.

TripAdvisor Inc. (Nasdaq: TRIP) fell 7.1 percent to $43.55. The online travel-recommendation service said it expects earnings before interest, taxes, depreciation and amortization to grow at a percentage rate of “high single digit” in 2013. The forecast “came in lower than expected,” Anthony DiClemente, an analyst at Barclays Plc (NYSE: BCS), wrote in a note.

Weight Watchers International Inc. (NYSE: WTW) tumbled 17 percent to $44.91. The company forecast annual earnings of $3.50 to $4 a share, compared with the $4.75 average estimate in a Bloomberg survey of analysts.


Bloomberg News contributed to this report.


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