VOL. 41 | NO. 7 | Friday, February 17, 2017
Deal hunger sends food stocks higher; US indexes at records
NEW YORK (AP) — Stocks are breaking records again Tuesday as investors come back from a long weekend hungry for deals. While Kraft Heinz and Unilever couldn't complete a proposed $143 billion mega-merger, food and household goods makers are rising as investors think other deals are coming. Chicken chain Popeyes is jumping after it agreed to be bought by Restaurant Brands, which owns Burger King. Energy companies are also climbing.
KEEPING SCORE: The Dow Jones industrial average climbed 106 points, or 0.5 percent, to 20,730 as of 2:45 p.m. Eastern time. The Standard & Poor's 500 index rose 12 points, or 0.5 percent, to 2,363. The Nasdaq composite gained 20 points, or 0.3 percent, to 5,858. All three indexes are at record highs and are on track for their ninth gain in the last 10 days. The Russell 2000 index of smaller companies added 8 points, or 0.6 percent, to 1,407, which put it in line for a record as well.
U.S. markets were closed Monday for the Presidents Day holiday.
LET'S CALL THE WHOLE THING OFF: Kraft Heinz and Unilever both slumped after Kraft withdrew a $143 billion offer to buy its rival. Unilever said the offer was too low and the companies said Kraft Heinz was giving up its effort. Kraft Heinz, which owns brands including Oscar Mayer, Jell-O and Velveeta, gave up $3.47, or 3.6 percent, to $93.18. Unilever, the maker of Hellman's, Lipton and Knorr, declined $3.76, or 7.7 percent, to $44.77.
THE QUOTE: Jefferies & Co. analyst Kevin Grundy said the Kraft Heinz-Unilever talks surprised Wall Street because Unilever only gets a minority of its revenue from food. With the Unilever talks apparently dead, analysts think Kraft Heinz is still interested in buying another company and they are wondering if it will pursue a different consumer products company or stick to the food industry.
"
That's why you saw the (home and personal care products) companies move up on Friday and you're seeing some of them follow through today," he said. Grundy added that Unilever's shareholders might push that company to make a deal as well.
Kraft Heinz, which is mostly owned by 3G Capital and Warren Buffett's Berkshire Hathaway, has a reputation for buying companies and slashing their costs to make bigger profits.
SNACK ATTACK: Oreo maker Mondelez, which was once part of Kraft, jumped 5 percent and jam maker Smucker rose 4 percent, while cereal makers General Mills and Kellogg gained 3 percent and 1.5 percent, respectively. Among household goods makers Colgate-Palmolive, Clorox and Kimberly-Clark all rose at least 1 percent.
ENERGY: Benchmark U.S. crude oil rose 66 cents, or 1.2 percent, to $54.06 per barrel in New York. Brent crude, used to price international oils, added 48 cents to $56.66 a barrel in London.
Hess gained $1.09, or 2.1 percent, to $52.84 and Transocean rose 36 cents, or 2.7 percent, to $13.52.
CRAVING SOME CHICKEN: Restaurant Brands International, the company that owns the Burger King and Tim Hortons brands, agreed to buy Popeyes Louisiana Kitchen for $1.8 billion. Shares of Popeyes jumped from about $66 to $70 and then fell back again last week as reports about the deal swirled. Restaurant Brands agreed to pay $79 a share, and Popeyes climbed $12.68, or 19.2 percent, to $78.80. Restaurant Brands' stock jumped $3.66, or 6.8 percent, to $57.56.
AMAZON WHO? Wal-Mart jumped $2.19, or 3.2 percent, to $71.56 after the company said its online business surged in the fourth quarter and it reported more business in the U.S. during the holiday season. Investors have been hoping the company's online sales would take off, and they've improved in the last two quarters. Wal-Mart recently bought web-based retailers Jet.com and Moosejaw to strengthen its sales.
Online rival Amazon continued to set record highs as it rose $11.26, or 1.3 percent, to $856.33.
DON'T TOUCH THAT DIAL: Scripps Networks, the parent of Food Network, Travel Channel and HGTV, climbed after it reported better ratings and stronger ad sales. Its stock gained $5.90, or 7.8 percent, to $81.94 while Discovery Communications, the parent of TLC and Animal Planet, picked up $1.14, or 4 percent, to $29.82. News Corp, which owns the Fox cable channels, rose 21 cents, or 1.6 percent, to $13.29.
CURRENCIES: The dollar rose to 113.54 yen from 112.93 yen late Friday. The euro sank to $1.0550 from $1.0607.
BONDS: Bond prices slipped. The yield on the 10-year Treasury note remained at 2.43 percent from 2.42 percent.
OTHER ENERGY TRADING: Wholesale gasoline shed 2 cents to $1.49 a gallon. Heating oil rose 1 cent to $1.64 a gallon. Natural gas plunged 27 cents, or 9.5 percent, to $2.56 per 1,000 cubic feet. That was its lowest price in just under a year.
METALS: Gold dipped 20 cents to $1,238.90 an ounce. Silver lost 3 cents to $18 an ounce. Copper rose 4 cents to $2.75 a pound.
OVERSEAS: After a survey showed the economy of the 19-country Eurozone is growing at its fastest pace in almost six years, Germany's DAX advanced 1.2 percent while the French CAC 40 rose 0.5 percent. In Britain, the FTSE 100 retreated 0.3 percent. Tokyo's Nikkei 225 advanced 0.7 percent after a measurement of manufacturing activity reached its highest level since 2014. The Hang Seng of Hong Kong retreated 0.8 percent. The Kospi in South Korea gained 0.9 percent.
___
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay