By Sara Sjolin and Mark DeCambre, MarketWatch
U.S. stocks were moving sharply higher Monday, buoyed by a
Warren Buffett-backed merger, remarks from a Federal Reserve
official that suggest a September interest-rate hike may not be a
done deal.
The mini rally in equities, supported by the energy and
industrial stocks, also comes after China's stock market enjoyed a
rally of its own overnight, perhaps assuaging some concerns that
the country's stock market is running out of steam.
"China has been the No. 1 concern in the market and if the
market believes that China's not coming apart at the seams, then
we're going to see a nice bounce," said Tobias Levkovich, chief
equity strategist, at Citigroup.
China's Shanghai Composite Index rallied 4.5% for its biggest
one-day gain in a month
(http://www.marketwatch.com/storyno-meta-for-guid) on expectations
Beijing will maintain its market support.
The main U.S. indexes have been weighed by worries about the
prospect a slowdown in Asia as well as impending tightening of U.S.
monetary policy.
But comments from Federal Reserve Vice Chairman Stanley Fischer
on Monday may have helped ease some of those concerns. He told
Bloomberg TV he doesn't expect the first interest-rate hike by the
U.S. central bank in more than nine years to occur until after
inflation returns
(http://www.marketwatch.com/story/no-rate-hike-until-fed-sees-inflation-returning-to-normal-fischer-2015-08-10)
closer to the Fed's target of around 2%. The inflation rate has
dipped close to zero in recent months and hasn't been above 2%
since April 2012
(http://www.marketwatch.com/story/feds-fischer-suggests-september-rate-hike-not-a-done-deal-2015-08-10).
A $32 billion acquisition of mechanical-parts maker Precision
Castparts
(http://www.marketwatch.com/story/berkshire-hathaway-to-buy-precision-castparts-for-32-billion-2015-08-10)
Corp. (PCP) by Warren Buffett's Berkshire Hathaway (BRKA)(BRKA), at
a 20% premium to the company's Friday closing price, also provided
a boost to investor sentiment.
The Dow Jones Industrial Average was up 225 points, around 1.3%
higher, to 17,598.16. All 30 of the blue-chip indexes components
were in positive territory, led by Caterpillar Inc.(CAT), up 3.1%,
and Apple Inc.(AAPL), up 2.8%, in early trade, as the Dow attempts
to snap a seven-session losing streak, its worst since 2011's debt
ceiling crisis
(http://www.marketwatch.com/story/us-stock-futures-flat-as-traders-dont-dare-to-move-before-jobs-data-2015-08-07).
Meanwhile, S&P 500 jumped 23 points, or 1.1%, to 2,100.94.
All 10 of the S&P's sectors were higher, with the energy
sector, up 2%, and industrials, up 1.8%, leading the charge. The
tech-laden Nasdaq Composite Index was 50 points, or about 1% up, at
5,093.37.
On Friday, the main indexes closed lower after the jobs report
matched economists estimates, giving investors little reason to
believe that a rate hike would be derailed.
"There was enough encouragement in the detail of the [jobs]
report to suggest that the U.S. labor market is gradually
improving. Hours worked pushed higher, and full-time employment
improved, which should be enough to keep [Fed Chairwoman] Janet
Yellen on track for a first Fed rate hike in September," said
Rebecca O'Keeffe, head of investment at stockbroker Interactive
Investor, in a note on Monday.
There are no major data releases on tap on Monday, but Atlanta
Fed President Dennis Lockhart will give a speech to the Atlanta
Press Club at 12:25 p.m. Eastern Time. Last week, Lockhart
suggested that Fed policy makers are prepared to raise the
Fed-funds rate in September
(http://www.marketwatch.com/story/dollar-weakens-against-commodity-linked-rivals-as-oil-rebounds-2015-08-04).
Other markets: European markets were mixed, as resource firms
fell after a round of downbeat data from China
(http://www.marketwatch.com/story/chinas-economy-enters-second-half-of-2015-on-weak-note-2015-08-09)--a
major user of raw materials.
Oil prices (http://www.marketwatch.com/storyno-meta-for-guid)
rose, attempting a rebound from last week's losses
(http://www.marketwatch.com/story/oil-gains-but-still-on-pace-for-hefty-weekly-drop-2015-08-07),
when futures slumped 6.9% to the lowest settlement level since
March. Metals prices were mostly higher, while the dollar slipped
against most other major currencies.
Earnings:Dean Foods Co.(DF) shares fell 7% after the company
reported quarterly results Monday
(http://www.marketwatch.com/story/dean-foods-swings-to-profit-beats-expectations-2015-08-10).
The milk processor unexpectedly said late Friday that Chairman Tom
C. Davis has resigned.
It gets busier after the bell, with Kraft Heinz Co.(KHC), burger
chain Shake Shack Inc.(SHAK) and videogame company Take-Two
Interactive Software Inc.(TTWO) on the earnings docket.
Movers & shakers:Berkshire Hathaway Inc.(BRKA) (BRKA) said
it is buying Precision Castparts Corp
(http://www.marketwatch.com/story/berkshire-hathaway-nears-deal-to-buy-precision-castparts-2015-08-08-12103303).(PCP),
in what could be Berkshire's largest takeover ever. Precision
Castparts shares were up nearly 30% in premarket trade Monday.
B-shares of Warren Buffett's investment vehicle fell 0.7% in
early trade on Monday after the conglomerate late Friday reported
its second-quarter profit fell to $4.01 billion
(http://www.marketwatch.com/story/berkshire-hathaway-operating-income-drops-10-2015-08-07-174853111),
or $2,442 per Class A share, from $6.4 billion, or $3,889 a share,
a year earlier.
(http://www.marketwatch.com/story/berkshire-hathaway-nears-deal-to-buy-precision-castparts-2015-08-08-12103303)
Apple Inc.(AAPL) jumped early 3%. The tech major is expected to
host a special event in the week of Sept. 7
(http://www.marketwatch.com/story/apple-expected-to-host-iphone-apple-tv-event-on-sept-9-report-2015-08-07)
to unveil its latest iPhone and Apple TV.
U.S.-listed shares of Alibaba Group Holding Ltd.(BABA) rose 2.6%
after the Chinese e-commerce giant said it would invest more than
28 billion yuan ($4.63 billion) for a nearly 20% stake in Suning
Commerce Group Ltd.(002024.SZ).
Also read:Warren Buffett's favorite indicator shows it's time to
unload stocks, buy bonds
(http://www.marketwatch.com/story/warren-buffetts-favorite-indicator-shows-its-time-to-unload-stocks-buy-bonds-2015-08-10)
(http://www.marketwatch.com/story/warren-buffetts-favorite-indicator-shows-its-time-to-unload-stocks-buy-bonds-2015-08-10).