The much needed relief in oil prices on Tuesday picked up from where it left off last week, sending the broader market and Deal Stocks soaring. Light sweet crude oil slid $3.09 to settle at $127.95 per barrel, and the Dow Jones Industrial Average ticked up 135.16 points to close at 11,602.50.
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Foundry Networks Inc. was a standout among Deal Stocks, recording a 32.36% gain to close at $18.08 per share on news that networking gear maker Brocade Communications Systems Inc. will buy its rival for $3 billion.
Even bad news met with positive Street reactions amid the oil-induced market euphoria. Ailing bank Wachovia Corp. suffered a second-quarter net loss of $8.9 billion, which included a hit of $6.1 billion alone for write-downs for bad investments related to the mortgage and credit crisis. The bank also announced plans to slash its dividend, cut just over 10,700 jobs and sell select assets. However, investors must have been prepared for the bad news as shares rode the broader market rally, closing up 27.39% to $16.79 per share.
The airlines tend to ride the ebbs and flows of oil prices, and pending merger partners Delta Air Lines Inc. and Northwest Airlines Corp. were no exception as they rose 17.53% to close at $7.71 per share, and 16.86% to close at $9.08, respectively. Delta in late June reached an agreement with its pilots and the aviators at Northwest, clearing a key hurdle in the planned deal. - Michael Rudnick
