U.S. stocks rose Monday, with the Standard & Poor’s 500-stock index hitting a record intraday high, helped by gains in health insurers’ shares and optimism about merger activity.
The Nasdaq reached a 14-year high, though all three indexes closed off their highs for the day, with the S&P 500 finishing less than a point away from its record close of 1,848.38.
Humana and UnitedHealth Group ranked among the S&P 500’s biggest percentage gainers, with Humana’s stock jumping 10.6 percent, to $113.69, after the company said that the government’s proposed cuts to the private Medicare program appeared to be less than it had forecast. UnitedHealth shares rose 3 percent, to $76.01.
Aetna rose 2 percent to close at $71.80 after giving a 2014 earnings outlook.
Weak recent economic data have largely been blamed on harsh winter weather, which has kept investors hopeful that the pickup in the economy remains intact. The latest data showed that the Chicago Fed National Activity index fell to minus-0.39 in January from 0.16 in December, while financial data firm Markit’s preliminary February reading on the services sector fell to 52.7 from 56.7.
Detroit’s plan to deal with its $18 billion of debt and emerge from municipal bankruptcy would set a troubling precedent for the U.S. municipal bond market, Fitch Ratings said Monday.
Under the plan Detroit filed in U.S. Bankruptcy Court on Friday, owners of certain general-obligation (GO) bonds would take an 80 percent haircut on their investments.
The city’s two pension funds, meanwhile, would see higher recovery rates, aided by pledges worth about $830 million from philanthropic foundations, the Detroit Institute of Art and Michigan Gov. Rick Snyder (R), who must win legislative approval for the state’s $350 million share.
“Fitch considers Detroit’s plan of adjustment to be hostile to GO bondholders,” the rating agency said. “If this priority of creditors is upheld, Fitch expects that this disregard for the rights of bondholders will factor into higher borrowing costs for local issuers, and ultimately for local property taxpayers, in Michigan.”
The rating agency took particular issue with the treatment of voter-approved unlimited-tax GO bonds as unsecured. Insurance companies that guaranteed debt service payments on those bonds have sued the city over this treatment.
Judge Steven Rhodes, who is overseeing Detroit’s bankruptcy case, said last week that he would rule on the matter in two to three weeks but urged the insurers and the city to settle their dispute before that.
● Men’s Wearhouse pressed on with its bid for Jos. A. Bank Clothiers, boosting its offer by more than 10 percent in spite of the smaller company’s effort to stay independent by buying outdoor clothing retailer Eddie Bauer. Men’s Wearhouse raised its cash tender offer to Jos. A. Bank shareholders to $63.50 per share, from $57.50, and added that it could increase the offer to $65 if it was able to conduct limited due diligence. Jos. A. Bank shares rose 9.1 percent after Men’s Wearhouse increased its offer for the clothing retailer.
● Nissan Motor is recalling 16,838 Frontier pickup trucks in North America to address an electrical issue that could cause a fire, according to documents filed with U.S. safety regulators. The documents said a circuit breaker in midsize trucks from model years 2012 through 2014 may have been installed incorrectly at an assembly plant in Canton, Miss., potentially causing an electrical short and fire. The power seat and sunroof functions might also be rendered inoperable, according to documents filed with the National Highway Traffic Safety Administration.
● Bernard Madoff’s longtime secretary, Annette Bongiorno, said Monday that she was in the dark about her boss’ s epic Ponzi scheme. She made the claim after deciding to testify in her own defense. She and four other employees of the disgraced financier are on trial in Manhattan federal court. The defendants are accused of assisting Madoff in a fraud that cheated thousands of investors out of nearly $20 billion. Madoff is serving a 150-year prison sentence.
● The head of the United Automobile Workers said Monday that the union’s appeal of a failed organizing effort at a Volkswagen plant in Chattanooga, Tenn., will focus on the actions of outside parties, not the German automaker itself. UAW President Bob King said, “Corporate VW acted with great integrity,” in the run-up to last week’s election. “Our issue is really with outside third parties trying to threaten and intimidate both the company and workers.” Late last week, the UAW asked the National Labor Relations Board to investigate the vote, citing what it characterized as “interference by politicians and outside special interest groups.”
● Egg McMuffin, meet the Waffle Taco. Taco Bell is readying for the launch of its national breakfast menu March 27, with items such as the A.M. Crunchwrap designed to appeal to its fan base of younger men. The chain says that breakfast will be available until 11 a.m. — a half-hour later than McDonald’s offers its breakfast items. McDonald’s has long been the fast-food leader in the mornings, with its popular sausage biscuits, hot cakes and other items pulling in roughly 20 percent of the company’s U.S. sales. But the chain has been facing stiffer competition over the years, with places such as Starbucks and Subway looking for a piece of the growing breakfast business. ●
— From news services
● 9 a.m.: S&P Case-Shiller home-price index.
● 10 a.m.: Consumer confidence.
● Earnings: Domino’s Pizza, DreamWorks Animation SKG, Hertz, Macy’s Martha Stewart, Rosetta Stone.●