Deal news, jobless claims push stocks higher

Published on NewsOK Modified: May 29, 2014 at 3:27 pm •  Published: May 29, 2014
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NEW YORK (AP) — Another quiet day, another quiet record.

Stocks rose modestly Thursday, sending the Standard & Poor's 500 index to another record high. Investors rallied behind a bidding war in the food industry as well as a somewhat positive report on the U.S. labor market.

The S&P 500 rose 10.25 points, or 0.5 percent, to 1,920.03, closing above Tuesday's record of 1,911.11. The Dow Jones industrial average rose 65.56 points, or 0.4 percent, to 16,698.74 and the Nasdaq composite rose 22.87 points, or 0.5 percent, to 4,247.95.

Among the biggest gainers was deli meat and hotdog maker Hillshire Brands, which jumped $7.95, or 18 percent, to $52.76. Only two days after Pilgrim's Pride made a $5.56 billion offer to buy the company, chicken company Tyson Foods stepped in to offer $6.2 billion.

Investors expect that Tyson's offer will start a bidding war. Hillshire's closing price of $52.76 was already above Tyson's offer of $50 per share. The stock is up 43 percent this week alone.

Tyson also rose on the news. The stock gained $2.50, or 6 percent, to $43.25, making the company the biggest gainer in the S&P 500.

The overall stock market has moved little this year, but one theme that continues to play out is the large amount of corporate deals being announced. Just during this holiday-shortened week, Apple said late Wednesday it would buy Beats Electronics for $3 billion, and now there's the battle over Hillshire Brands.

"It's an encouraging sign because companies see the economy improving," said Joe Tanious, a global markets strategist with J.P. Morgan Asset Management. "Last thing you want to do as a large company is use your cash to buy a company when you have an uncertain outlook on the economy."

Other food companies also rose following the Hillshire Brands news as traders anticipated more deals and possibly more bidding wars. Jam and jelly maker J.M. Smucker rose $2.38, or 2.4 percent, to $103. Hormel Foods, which makes Spam, rose $1, or 2 percent, to $48.71.

Investors also had a round of mixed economic data to interpret Thursday.

The Commerce Department estimated that the U.S. economy shrank at an annual rate of 1 percent in the first three months of the year, worse than the government's initial estimate a month ago of growth of 0.1 percent. The contraction was partly due to the severe weather in January and February, economists said.

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