After Mortgage Jitters, Stocks Rise On a Spate of Acquisitions
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Tuesday, March 13, 2007
NEW YORK, March 12 -- Wall Street's recovery from last month's plunge gained momentum Monday, as investors looked past widening cracks in mortgage lending and bought stocks in response to another round of acquisitions.
The Dow Jones industrial average rose 42.30, or 0.34 percent, to 12,318.62. The Standard & Poor's 500-stock index advanced 3.75, or 0.27 percent, to 1406.60, and the Nasdaq composite index rose 14.74, or 0.62 percent, to 2402.29.
New Century Financial, a major mortgage broker in the high-risk market known as subprime, warned that all of its lenders had cut off short-term funding or announced plans to do so after it couldn't make payments to them. New Century relies on short-term loans to finance mortgages. It said that it would need about $8.4 billion should it be forced to repurchase its outstanding mortgage loans and that it would not be liquid enough to do so. Trading in New Century's shares remained halted Monday, and the New York Stock Exchange said it was reviewing its listing status.
The day's buyout news rose above the din over subprime lenders. Word that Kohlberg Kravis Roberts, a private-equity company, struck a deal to acquire Dollar General for about $6.87 billion sent Dollar's shares sharply higher. Shares of the drugmaker Schering-Plough rose after it agreed to buy a Dutch pharmaceuticals business for $14.5 billion. UnitedHealth Group, a health insurer, announced plans to acquire Sierra Health Services, which provides health-care services, for about $2.6 billion. And consumer-products giant Procter & Gamble said it had struck a deal to sell its Western European tissue and towel business to SCA, which makes paper and other products, for about $671.9 million.
Movers
Fremont General, a subprime lender, fell $1.30, to $6.73.
Hovnanian Enterprises lost $1.75, to $27.59, as homebuilders worried that tightening credit standards would make it harder for consumers to buy homes.
Dollar General jumped $4.29, to $21.07, well past its 52-week high of $18.32.
Schering-Plough rose 10 cents, to $23.95.
Sierra Health rose $5.67, to $41.57.
UnitedHealth advanced 27 cents, to $53.27.
