Rising commodity prices and stirrings of corporate takeovers are making investors more optimistic about the economy.
Stocks rose for the third straight day Tuesday following gains among materials and energy stocks.
Gold topped $1,000 an ounce for the first time since February and oil jumped more than $3 a barrel as investors look for more ways to profit from an improving economy. A weaker dollar also helped push prices higher.
Talk of a revival in corporate dealmaking also lifted investors’ confidence.
A takeover bid from Kraft Foods Inc. for rival Cadbury ? even though Cadbury rejected it ? combined with a big phone deal in England lifted hopes that takeover activity could be picking up ? a positive indicator for corporate confidence in the economy. Deutsche Telekom and France Telecom said they planned to combine their British mobile phone units to form that country’s biggest mobile operator.
A weekend pledge by the world’s 20 biggest economies to support the global recovery with stimulus efforts also helped keep the market’s tone positive.
George F. Shipp, chief investment officer at Scott & Stringfellow in Virginia Beach, Va., said U.S. markets are advancing in part to catch up with overseas trading after the Labor Day holiday in the U.S. He also said the takeover talk surrounding Cadbury underscores the fact that some companies are faring better than others.
“Some companies are doing reasonably well,” Shipp said. “Chocolate is less susceptible to whatever is going to happen in mortgages and banking and unemployment.”
According to preliminary calculations, the Dow Jones industrial average rose 56.07, or 0.6 percent, to 9,497.34. The broader Standard & Poor’s 500 index rose 8.99, or 0.9 percent, to 1,025.39, and the Nasdaq composite index rose 18.99, or 0.9 percent, to 2,037.77.
Copyright 2009 The Associated Press.