Traders-Blog.com

Stocks rallied, lifting the Dow Jones Industrial Average by over 100 points, as a boost from Asian and European markets overnight and a flurry of deals — including talk of a big merger between two European banks — helped investors set aside recent concerns about the sub-prime mortgage market. The advance was pretty broad-based, thanks to a slew of corporate deals. Investors are also gearing up for the start of the two-day Federal Reserve policy meeting.

Today, the Dow Jones industrial average closed up 115.76 or 0.96% to 12,226.17, the broader S&P 500 closed up 15.11 or 1.09% to 1,402.06, and the Nasdaq closed up 21.75 or 0.92% to 2,394.41.

Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners by 19 to 10 on volume of 1.6 billion shares.

Investors are looking forward to the Fed policy meeting, with a decision on interest rates expected Wednesday afternoon. The central bank is widely expected to keep interest rates steady at 5.25%. But what the bankers say in the statement about the outlook for rates through the rest of the year will be closely watched by investors.

Shares of TXU closed up $1.52 or 2% to $64.27, as it is reportedly being wooed by a private equity group, led by the Blackstone Group. This could upset the record-breaking $32 billion bid for the Texas power company from competing buyout shops. TXU had agreed to be acquired by a private equity group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group last month in the largest leveraged buyout ever.

Stock of Community Health systems closed down $1.95 to $34.85, after stating that it was buying Triad Hospitals for $5.1 billion in cash, ending an existing $4.5 billion deal for Triad to be taken private by a group of private equity funds. Shares of Triad Hospitals closed up$2.52 to $51.88. The deal pays $54 per share in cash, plus $1.7 billion in debt. This is a 9% premium over Friday’s close at $49.36.

Shares of Service Master closed up $1.67 or 12.3% to $15.14, after it agreed to be taken private by an investment group in a deal worth $5.5 billion in cash and debt. Shareholders will receive $15.625 a share, a premium of 16% over Friday’s closing price.

Stock of Take-Two Interactive closed up $1.76 or 7% to $22.61, after the video game publisher said it was considering putting itself for sale. The company said that there was no guarantee that it would make any specific alternative proposal to shareholders.

U.S. light crude oil for April delivery fell 52 cents to $56.59 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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