Market Snapshot: U.S. stocks rise on news of Wrigley buyout

By Daniel | April 28, 2008

U.S. stocks tilt higher on news of Wrigley buyout

Wall Street keeps cautious tone ahead of two-day Federal Reserve meeting

By Nick Godt, MarketWatch

Last Update: 12:24 PM ET Apr 28, 2008

NEW YORK (MarketWatch) — U.S. stocks rose slightly on Monday, with the market
cheering a buyout of Wm. Wrigley Jr. by privately held Mars and Warren Buffett’s
Berkshire Hathaway.

Gains remained capped, however, with investors cautiously looking ahead to a
two-day meeting by the Federal Reserve, where the central bank is expected to
signal it may not be cutting interest rates for much longer.

“All eyes are trained on the Fed’s policy statement on Wednesday to see how
strongly it hints at a pause in the easing cycle after an expected 25 bps rate
cut to 2.0%,” said Sal Guatieri, economist at BMO Capital Markets.

Economic data, meanwhile, may reveal the U.S. economy is in a recession. On
Wednesday, first-quarter gross production data may reveal the economy has already
contracted. On Friday, investors expect jobs data to reveal another bid drop in
payrolls in April.

Offsetting early selling pressure, shares of Wm. Wrigley Jr. Co. (WWY) jumped 22%
to $76.68, lifting the consumer-discretionary sector and the broader market.
Privately held Mars and Warren Buffett’s Berkshire Hathaway (BRKA) said they
would buy the chewing-gum maker for about $23 billion, or $80 a share.

The Dow Jones Industrial Average ($INDU) was up 8 points to 12,900, with 18 of
its 30 components rising, led by shares of Verizon Communications (VZ), Merck &
Co. (MRK) and General Motors Corp. (GM).

Shares of GM rival Ford Motor Co. (F) gained 10%, with Kirk Kerkorian’s Tracinda
announcing it planned to offer $8.50 per share for up to 20 million of its
shares.

The S&P 500 index ($SPX) was up 1.2 points, or 0.1%, to 1,398, while the Nasdaq
Composite (COMP) rose 4 points, or 0.2%, to 2,427.

Energy was also among the rising sectors. Crude-oil futures were up 0.2% to
$118.78 a barrel after earlier hitting a new high of $119.93 a barrel, boosted by
a refinery strike in the United Kingdom and violence in Nigeria.

On the earnings front, Dow-component Verizon Communications (VZ) rose 1.8% after
reporting a 10% profit rise, helped by the performance at its 55%-held Verizon
Wireless unit. Vodafone Group (VOD) owns the rest of the mobile operator that
signed up 1.5 million customers during the most recent quarter.

On Friday, stocks finished mostly higher, with the Dow rising 42 points and the
S&P 500 up 9 points. Microsoft’s cautious outlook dragged the Nasdaq Composite
down about 6 points.

Attention on Monday turned to the Federal Reserve, days away from a possible
quarter-point rate cut.

Two-thirds of respondents to a money manager poll from Ried Thunberg Icap think
the FOMC will signal a pause in rate cuts is likely after making a quarter-point
cut on Wednesday.

Continental Airlines (CAL) fell 1.9% after saying it has no plans to merge with
another airline, apparently scuttling rumors of a possible deal with United
Airlines parent UAL Corp. (UAUA). Both Continental and UAL shares dropped more
than 5% in pre-market trade.

UAL is continuing merger discussions with US Airways Group (LCC), The Wall Street
Journal reported.

The three-week deadline that Microsoft Corp. (MSFT) gave Yahoo Inc. (YHOO) to
come to an agreement on its unsolicited bid for the Internet media company passed
without any announcement from either side, leading to the possibility that the
battle for Yahoo is about to turn hostile. Shares of Yahoo rose 0.2%, while
Microsoft fell over 2%.

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