(AA) Stock Market News for August 16, 2011 – Market News

In what is being termed as the return of “Merger Monday”, an acquisition spree gave a boost to markets which posted its longest rally since early July. Additionally, positive economic news from Japan also brought joy to the markets and helped the Dow record its best three-day point gains since November 2008.

The Dow Jones Industrial Average (DJIA) jumped 213 points or 1.9% to settle at 11,482.90. The Standard & Poor 500 (S&P500) gained 2.2% and closed the day at 1,204.49. The Nasdaq Composite Index surged 1.9% to finish the day at 2,555.20. On the New York Stock Exchange, consolidated volumes were at 4.5 billion shares, marginally ahead of last year’s average of 4.3 billion shares. However, the volumes were significantly lower than last week’s record volumes that went past 9 billion shares. On the NYSE, for every stock that climbed down, more than 10 stocks were on the winning side.

Since last week, the Dow has claimed the limelight. The historic volatile run of the markets throughout last week saw the Dow swinging over 400+ points each time, except on Friday. This time, the Dow again entered the record books, registering its best three-day point jump since the 927-point jump in November 2008. The blue-chip index also recorded its biggest percentage gain since it rose 9.5% in the first three days of the bull run in March 2009. The Dow has now gained 7.1% in the three days.

To add to the good news, none of the Dow components had to trade down with all of them settling in the green. Leading the gains were Alcoa, Inc. (NYSE:AA), Bank of America Corporation (NYSE:BAC), Chevron Corp. (NYSE:CVX), General Electric Co. (NYSE:GE), The Home Depot, Inc. (NYSE:HD), Pfizer Inc. (NYSE:PFE) and Exxon Mobil Corporation (NYSE:XOM) and they gained 2.5%, 7.9%, 3.4%, 3.2%, 2.9%, 2.7% and 3.2%, respectively.

The gains were largely attributable to the mergers and acquisitions that dominated the day with the focus on Google Inc.’s (NASDAQ:GOOG) offer to buy Motorola Mobility Holdings, Inc. (NYSE:MMI). Google has offered to pay $12.5 billion in cash for the mobility firm which is the search engine’s biggest acquisition bid till date. Google is paying a 63% premium over Motorola’s closing price. The search giant’s shares declined 1.2% but Motorola Mobility’s shares sky-rocketed 55.7%.

In another development, Time Warner Cable Inc. (NYSE:TWC) said it would acquire cable operator Insight Communications paying a hefty $3 billion. Separately, Transocean Ltd. (NYSE:RIG) said that it would acquire Aker Drilling and agreed to pay $1.4 billion.

Coming to economic news, the Empire State Manufacturing Survey was a weak link as a report from the Federal Reserve Bank of New York stated: “The general business conditions index fell four points to -7.7, its third consecutive negative reading. The new orders index also remained below zero, at -7.8, while the shipments index was positive at 3.0. The unfilled orders and inventories indexes dropped further into negative territory. Price indexes continued to retreat, with the prices paid index falling fifteen points to 28.3 and the prices received index falling three points to 2.2”.

However, economic reports from the far-east acted as a strong catalyst for the markets as Japan reported that its economy declined lesser-than-expected after the tsunami and earthquake that struck Japan on March 11, 2011.

ALCOA INC (AA): Free Stock Analysis Report

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GENL ELECTRIC (GE): Free Stock Analysis Report

GOOGLE INC-CL A (GOOG): Free Stock Analysis Report

HOME DEPOT (HD): Free Stock Analysis Report

MOTOROLA MOBLTY (MMI): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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