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Deal Stocks, markets bleed green on expected rate cut

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Published March 18, 2008 at 1:22 PM

The markets were a sea of green, looking like a post-St. Patrick's celebration with investors pumping up the market on the heels of a better-than-expected Lehman Brothers Inc. earnings announcement and an expected Federal Reserve rate cut. Overall, the Dow surged up 277.61, or 2.32% to 12,249.86 and the Nasdaq jumped 52.48, or 2.41% to 2,229.49 in midday trading. Here's a closer look at the performance of deal-related stocks:

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  • Bear Stearns Cos. [BSC] is up nearly 38% on speculation that another bidder may come along to make an offer higher than J.P. Morgan Chase & Co.'s [JPM] $2 per share offer. Experts say that risk arbitrage traders are bidding up the stock believing that the J.P. Morgan deal will be supplanted by a better deal.
  • Lehman is up nearly 34% on higher-than-expected earnings, quelling fears -- for the moment -- that the securities firm is in jeopardy of following the fate of Bear.
  • Ford Motor Co. [F] is up slightly on news that the long-awaited sale of Jaguar and Land Rover to Tata Motors Ltd. is nearing. The Indian auto company signed a $3 billion bridge loan with Citigroup Inc. and J.P. Morgan for the purchase. The deal reportedly will be announced next week.
  • Delta Air Lines Inc. [DAL] and Northwest Airlines Inc. [NWA] are up despite an announcement of failed negotiations with pilot unions that may jeopardize the merger that would create the largest airline company in the world.
  • Yahoo! Inc. [YHOO] rises as the company restated its belief that the Internet company is expecting bigger growth and that Microsoft Corp.'s [MSFT] blockbuster merger bid is grossly underestimating its value.

- Gerald Magpily



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