Monday, June 4, 2007

U.S. Stocks Rise, Led by Oil Producers; Wal-Mart, XTO Advance

By Michael Patterson

June 4 (Bloomberg) -- America's equity benchmarks climbed to records again on analyst upgrades of Wal-Mart Stores Inc. and a rise in oil prices that buoyed energy shares.

Wal-Mart, the world's largest retailer, led the Standard & Poor's 500 Index to its fourth consecutive peak and the Dow Jones Industrial Average to its 27th this year after four brokerages recommended the company because of its planned $15 billion share-buyback plan. Oil and gas companies climbed to a high after the price of crude surged above $66 a barrel on concern supplies from Nigeria may be disrupted.

Shares overcame early declines sparked by the biggest-ever point slide in China's equity market. The agreement by Loews Corp. and XTO Energy Inc. to buy most of Dominion Resources Inc.'s onshore oil and gas properties for $6.5 billion gave investors another reason to buy stocks.

``We've got a good combination of bullish factors still in place,'' said Frederic Dickson, chief market strategist at D.A. Davidson & Co., which manages $17 billion in Great Falls, Montana. ``We still go higher from here.''

The S&P 500 added 2.84, or 0.2 percent, to 1539.18. The Dow average increased 8.21, or 0.1 percent, to 13,676.32. The Nasdaq Composite Index climbed 4.37, or 0.2 percent, to 2618.29.

Wal-Mart climbed $1.74, or 3.5 percent, to $51.21 and contributed the most to the S&P 500's advance. The shares were upgraded by brokerages including JPMorgan following Wal-Mart's decision to buy back shares and reduce the number of stores it plans to open this year.

Oil Rally

Crude oil for July delivery rose 1.7 percent to $66.21 a barrel in New York after union officials in Nigeria's oil and gas industry said they plan to support a general strike.

Energy shares in the S&P 500 climbed 1.2 percent as a group for the best gain among 10 industries.

Anadarko Petroleum Corp. added $2.30 to $51.95. Chesapeake Energy Corp. increased $1.19 to $36.23.

XTO Energy climbed $3.24, or 5.6 percent, to $61.61 for the No. 3 gain in the S&P 500. The oil and natural gas producer and Loews, the holding company owned by New York's Tisch family, agreed to buy most of Dominion's onshore oil and gas exploration business in separate transactions. Loews gained $1.33 to $52.35. Dominion added 23 cents to $87.87.

China Plunge

China's CSI 300 Index dropped 292.52, or 7.7 percent, to 3511.43 after the government's main business newspaper said the speed at which stock prices soared was ``extremely unusual.'' It was the benchmark's biggest point slide on record and the second time in a week it has fallen by more than 6 percent.

Chinese shares slid last week after the government tripled the stamp tax on securities trades to 0.3 percent. The measure, which doubled in the past six months, has tumbled 16 percent from its May 29 peak.

About four stocks rose for every three that fell on the New York Stock Exchange. Some 1.35 billion shares changed hands, 14 percent less than the three-month average.

Among other deals in the U.S. today, Solectron Corp. climbed 51 cents, or 15 percent, to $3.88 for the best gain in the S&P 500. Flextronics International Ltd. agreed to acquire the electronics manufacturer for about $3.6 billion in cash and stock. Flextronics slipped 16 cents to $11.54.

Sanmina-SCI Corp., the second-largest manufacturer of electronics for other companies after Flextronics, gained 20 cents to $3.75.

Accredited Home Lenders Holding Co. jumped $1.36 to $15.12 after the subprime lender that raised doubts about its survival agreed to sell itself to private-equity firm Lone Star Funds for about $400 million in cash, or $15.10 a share.

Palm Stake

Palm Inc. surged $1.48 to $17.57. The maker of the Treo mobile phone and e-mail device agreed to sell a 25 percent stake to private-equity firm Elevation Partners for $325 million and announced an overhaul of its board.

``There's a lot of global liquidity out there to fuel this M&A activity,'' said Tim Hartzell, who helps manage about $2 billion at Kanaly Trust Co. in Houston. ``There's still some room to go to the upside.''

1 comment:

Anonymous said...

Much of the original work on Los Angeles private equity fund performance comes from seminal work of Steve Kaplan and Antoinette Schoar who reported that the performance of 746 private equity funds in their sample was close to that of the S&P 500, net of fees. Subsequent work by Phalippou and Gottschalg (PG)found the performance of private equity funds was below that of public stock markets.