Wall Street closes higher on Citi earningsComment on this story
New York - US stocks ended higher on Monday, with the Dow Jones industrial average hitting an intraday record, lifted by Citigroup's better-than-expected earnings and more deals in the healthcare space.
Monday's flurry of mergers and acquisitions activity in the healthcare sector gave investors some confirmation that the US stock market is still attractive. Shire, which develops and sells drugs to treat rare diseases, succumbed to an increased takeover offer of 31 billion pounds ($53 billion) from AbbVie on Monday.
US-listed shares of Shire rose 2.1 percent to $254.27 while AbbVie shares slipped 0.2 percent to $54.85.
Generic drugmaker Mylan Inc said it would buy Abbott Laboratories' specialty and branded generics business outside the United States in an all-stock transaction valued at about $5.3 billion. Mylan shares advanced 2.1 percent to $51.24 while Abbott shares rose 1.3 percent to $41.82.
Citigroup Inc shares jumped 3 percent to $48.42 and gave the S&P 500 one of its biggest boosts. The stock rallied after Citigroup reported second-quarter adjusted earnings per share that exceeded the average analyst estimate and agreed to pay $7 billion to settle a US government investigation into mortgage-backed securities. The S&P financial index gained 0.6 percent.
“Citigroup is the first major commercial bank to report, and with today's earnings, the trend seems to be pointing that financials will have a good earnings season,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
The Dow Jones industrial average rose 111.61 points or 0.66 percent, to end at 17,055.42. The S&P 500 gained 9.53 points or 0.48 percent, to 1,977.10. The Nasdaq Composite added 24.93 points or 0.56 percent, to 4,440.42.
The Dow hit a record intraday high of 17,088.43.
Goldman Sachs analyst David Kostin raised his 2014 target for the S&P 500 to 2,050 from 1,900, citing expectations that the yield on the 10-year US Treasury note at around 3 percent will keep pushing investors into stocks for higher returns.
Shares of electric car makers also surged on Monday after China-based electric vehicle maker Kandi Technologies Group’s sales from its joint venture in China more than tripled in the second quarter from the first quarter.
US-listed shares of Kandi soared 26.6 percent to $18.64 while shares of US electric car maker Tesla climbed 3.9 percent to $226.70.
Earnings season will pick up speed this week, with 59 S&P 500 components scheduled to report. S&P 500 profits are forecast to grow 6.2 percent in the second quarter from a year ago, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.1 percent.
In order to justify current stock prices, analysts are looking to earnings to confirm that the economy recovered in the second quarter from the harsh winter.
About 4.77 billion shares traded on US exchanges, below the 5.35 billion average for the month to date, according to data from BATS Global Markets. - Reuters