Wall Street rallied strongly on Wednesday with trading influenced by a number of well-known investors revealing their latest purchases in filings with the Securities and Exchange Commision.
Early on Wednesday, stocks traded in a choppy fashion as a better-than-expected rise for industrial production in April was offset by news that building permits last month fell at their fastest pace since 1990.
The Dow Jones Industrial Average was boosted by the disclosure that its constituents, Citigroup (NYSE:C - news), and Johnson & Johnson were in favour among leading investors.
The Dow closed up 0.8 p+er cent at 13,487.53, and set its 23rd record close for the year. The S&P 500 rose 0.9 per cent to close at 1,514.14 and edged closer to its record level of 1,527.46 set in March 2000.
Georges Yared, chief investment officer at Yared Investment Research said good earnings and guidance for the coming quarter should support stocks and that the S&P was building up to moving higher towards its 2000 record peak.
Within the S&P, telecom, and financial stocks led the major sectors higher, while materials lagged.
Analysts at Bespoke Investment Group said that while all 10 major S&P sectors were still trading near their recent highs, "many seem to be rolling over a bit."
They said: "Financials, consumer discretionary, consumer staples and health care have all had slight declines after hitting overbought levels, and it will be key to see how they react to resistance levels."
The Nasdaq Composite gained 0.9 per cent to 2,547.42, and shrugged off weakness among semiconductors stocks. Earnings and lower guidance from Applied Materials (NASDAQ:AMAT - news) did weigh upon technology for much of on Wednesday and the Philadelphia semiconductor index fell 0.2 per cent, following a slide of 1.1 per cent on Tuesday.
Applied Materials, a chipmaker, reported better-than-expected earnings, but its guidance for sales disappointed investors. Its shares were down 3.1 per cent at $19.17.
Meanwhile the Russell 2000 index of small companies rose 0.7 per cent at 820.29 and rebounded from its lowest closing level in more than a month on Tuesday.
A number of stocks were in the spotlight on Wednesday when Berkshire Hathaway, Warren Buffett investment company, said it had invested in Norfolk Southern (NYSE:NSC - news) and Union Pacific (NYSE:UNP - news), two railroads, and also bought stock in Wellpoint and raised its holding in Johnson & Johnson, two healthcare companies.
Norfolk Southern rose 1.65 per cent to $56.79, Union Pacific gained 0.9 per cent to $119.39 and the S&P railroad index rallied 1.3 per cent, taking its gain for the year to 25.1 per cent.
Wellpoint gained 1.6 per cent at $84.86, while Johnson & Johnson rallied 2 per cent to $63.05.
Edward Lampert, the hedge fund manager, said late on Tuesday that he had purchased 15m shares of Citigroup. This prompted the shares to jump 4 per cent to $54.91. Analysts believe that the banking conglomerate could now become the next high-profile target for activist investors, given its underperforming share price in recent years. Such a move would show that even the biggest companies were not immune to activist pressure.
Meanwhile, George Soros, another of the most famous hedge fund managers, said his stake in Microsoft had doubled, and the stock rose 0.55 per cent to $31.07. Mr Soros had lowered his holdings in Oracle (NASDAQ:ORCL - news), and shares were up 0.8 per cent at $18.99, while he had sold shares in Ebay, down 0.75 per cent at $33.25, and Take-Two Interactive (NASDAQ:TTWO - news), and shares in the video game maker slid 0.2 per cent at $19.08.
Another big investor, Carl Icahn, a well-known activist, said he had purchased a large slice of Anadarko Petroleum (NYSE:APC - news), boosting its shares by 1.6 per cent to $47.20, and also bought shares in CSX (NYSE:CSX - news), the railroad finished up 1.4 per cent at $46.40. Mr Icahn also disclosed that his stake in Time Warner (NYSE:TWX - news), had been cut by nearly half. Its shares in the media group rallied 1.55 per cent 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 per cent 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," said Robert Gold, medical devices analyst at Standard & Poor's Equity Research.
After the closing bell, Hewlett-Packard (NYSE:HPQ - news) said second-quarter profit fell 6.5 per cent after a tax gain in the year- earlier period. In after-hours trade, shares in the computer maker were 0.7 per cent lower at $44.86, after a rise of 1 per cent in regular trade.
Shares in Amazon closed 4.4 per cent higher at $63.22, after the online retailer said it plans to launch a digital music store later this year and sell songs without copy protection restrictions.
In earnings news, Compuware reported a 20 per cent rise in fourth-quarter earnings and its shares rose 7.3 per cent to $10.67.
Shares in Federated Department (NYSE:FD - news) stores rose 1.2 per cent to $62.69 after its first-quarter profit rose more than 5 per cent, but missed analysts' estimates.
Source : ft.com
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