U.S. stocks largely unchanged amid strong jobs data and M&A activity

TradingPub Admin | February 14, 2013

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U.S. stocks were mostly unchanged on February 14, as markets responded to uplifting information such as news of mergers and acquisitions (M&A) and strong jobs data, as well as information pointing to stagnant economic growth in areas such as Japan and Europe. 

Flat stocks
The blue-chip S&P 500 finished trading 0.1 percent higher 1,521.38 at 4 p.m. in New York, according to Bloomberg. A 0.1 percent drop was experienced by the Dow Jones Industrial Average, which closed at 13,973.39.

Data provided by the media outlet reveals that the number of shares traded on U.S. exchanges during the day was 6.4 billion, which was 4.1 percent higher than the three-month average. 

Strong jobs data
The Labor Department released data indicating that the number of people filing initial applications for jobless benefits declined to 341,000 during the last week, according to USA Today. The number of these filings fell short of predictions. Various market experts used the data to support their assertion that the current unemployment rate - which is stuck at 7.9 percent - will continue to fall. 

Bloomberg reports that the figure for the week's jobless claims was the lowest in one month, and was below the median forecast of 360,000 applications predicted by economists participating in a poll conducted by the media outlet. 

Mergers and acquisitions
After February 14, when $36 billion in U.S. mergers and acquisitions were announced, the total of these transactions declared so far in 2013 rose to $145.8 billion. This figure was close to 50 percent higher than the total of $99.6 billion of these deals announced during the first two months of last year. 

"We're positive on the fact that M&A will continue to move higher," Jeff Morris, who serves as the Boston-based head of U.S. equities for Standard Life Investments, told the news source during a phone interview. "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." 

One deal that generated substantial visibility was the agreement between Buffett's Berkshire Hathaway Inc. and 3G Capital and H.J. Heinz Co., which will sell itself for $20 billion. Shares of the food maker's stock spiked 20 percent after the announcement was made. 

"Corporate America is a little more optimistic," Ted Harper, who contributes to the management of around $8 billion for Houston-based Frost Investment Advisors LLC, told the news source by phone. "Companies have repositioned, they have become far leaner and are looking for opportunities to deploy capital incrementally for growth." 

Global economic growth
Reuters reports that one factor that served to put downward pressure on stocks was data indicating that the gross domestic product of Japan fell 0.1 percent during the fourth quarter, and the economy of the euro zone also declined, marking the sharpest contraction since 2009. 

Randy Frederick, director of trading and derivatives at Charles Schwab, stated that there is substantial potential for appreciation in equities, according to the news source. He stated that "the only reason a company buys another company is because they see an upside."

He added that "even though we are at multiyear highs, this kind of activity shows that there is more room for a rally, feeding optimism to the market." 

Frederick went on to say that markets will fluctuate before breaking through the current resistance that is keeping them at certain levels. He noted that the S&P 500 Index has risen more than 6 percent in 2013. The group of stocks surged more than 13 percent in 2012. 

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