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US stocks flat despite airline deals

Feb 15 2013 07:30

New York - US stocks traded flat on Thursday despite the excitement from two giant M&A deals, the merger of American Airlines and US Airways, and Berkshire Hathaway and 3G's takeover of ketchup maker Heinz.

Analysts said the markets were partly echoing the slump in European markets on dismal economic growth reports from eurozone countries, as well as Japan.

Outstanding concerns about Europe were "exacerbated by a larger-than-expected contraction for the eurozone economy," said a note from Charles Schwab & Co.

At the close, the Dow Jones Industrial Average was down 9.52 points at 13,973.39.

The broad-based S&P 500 added 1.05 to reach 1,521.38, while the tech-rich Nasdaq Composite gained 1.78 points to 3,198.66.

US Airways shares fell 4.6% after the official announcement of its long-awaited merger with American Airlines, creating the largest US carrier.

American parent AMR Corp, under bankruptcy reorganisation, jumped 63.1%.

Heinz shares soared nearly 20% to $72.50 after the shock announcement that billionaire Warren Buffett's investment firm would partner with 3G Capital to buy Heinz in a $28bn deal offering shareholders $72.50 a share. Berkshire's B shares finished up 1.3%.

Other food companies also gained on the news, including General Mills, which rose 3.1% and Kraft Food Group, which jumped 0.8%.

Shares of Belgian-US giant Anheuser-Busch InBev, whose $20.1bn takeover of Mexican brewer Grupo Modelo has been challenged by US antitrust regulators, jumped 5.1 percent after the two companies said they would divest specific Modelo assets to please the regulators.

Distributor Constellation Brands, the main beneficiary of the divestments, rose 37.2%.

General Motors reported higher year-on-year earnings but still fell 3.2% after the profits came in below expectations amid losses in Europe.

Cisco Systems reported earnings that bested expectations, but gave up 0.7% following company comments that the European market remained difficult.

PepsiCo picked up 1.1% after reporting a 17 rise in year-over-year earnings.

Oil services firms Halliburton and Schlumberger picked up 6.1% and 3.7% respectively, while independent energy producer Apache fell 4.7% on property writedowns.

Telecommunications and cloud infrastructure company CenturyLink tumbled 22.3% after announcing it would cut its dividend.

Specialty food chain Whole Foods Market slipped 9.7% after it pointed to higher expenses and said profits would be lower in subsequent quarters compared with the first quarter.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.00 from 2.02 late on Wednesday, while the 30-year fell to 3.18 from 3.22 a day earlier. Bond prices and yields move inversely.

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wall street  |  markets


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