NEW YORK (Reuters) –
Stocks rose on Monday as higher oil prices lifted shares of energy companies and fund managers snapped up this quarter's winners to burnish their portfolios.
Energy shares ranked among the quarter's strong performers, and a 3.4 percent jump in the price of oil lifted them even further on Monday. Exxon Mobil Corp (XOM.N) was the Dow's top driver, rising 2.2 percent to $70.58.
Fund managers are enhancing their portfolios before the quarter ends on Tuesday in a ritual known as "window dressing" by selling some of the quarter's losers and scooping up the winners. This move bolstered stocks as well.
"This has been a heck of a run," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co, in San Francisco. "A lot of people didn't believe and left a lot at the table. Having the right positions (and) not showing a great deal of cash, that is really the main driving force here -- the so-called window dressing.
"You can show you own the names that everyone knows did well," he said.
The S&P 500 is up 16.2 percent so far for the quarter, putting it on track for its best quarter since the fourth quarter of 1998, when the index jumped nearly 21 percent. The S&P 500 has gained 37 percent since hitting a 12-year closing low in early March as early signs of an economic rebound surfaced.
Financials were the day's top advancer and the leader for quarterly gains, followed by technology.
The Dow Jones industrial average (.DJI) gained 90.99 points, or 1.08 percent, to end at 8,529.38. The Standard & Poor's 500 Index (.SPX) was up 8.33 points, or 0.91 percent, at 927.23. The Nasdaq Composite Index (.IXIC) was up 5.84 points, or 0.32 percent, at 1,844.06.
The S&P financial sector (.GSPF) is up 36.6 percent in the last three months, while technology (.GSPT) is up 20.1 percent and energy (.GSPE) is up 10.9 percent.
Shares of home builders helped underpin the market on Monday after Credit Suisse raised its rating on KB Home (KBH.N), citing stronger orders and more attractive valuation. KB Home was up 5.1 percent at $14.11. The Dow Jones U.S. Home Construction Index (.DJUSHB) advanced 1.5 percent.
Wall Street's eyes and ears also were on the news coverage of Bernie Madoff, who was sentenced to 150 years in prison on Monday for running what prosecutors called a $65 billion Ponzi scheme. When Madoff's fraud was revealed last December, its scope was so brazen and so massive that it shocked investors and made everyone question their broker.
Signs of life in overseas markets added to Wall Street's positive mood.
Shanghai's benchmark stock index (.SSEC) reached a one-year closing high for the fourth straight session as signs of a Chinese economic recovery and ample liquidity boosted the market, improving investor sentiment.
Crude oil futures jumped $2.33 to settle at $71.49 per barrel after Nigerian militants said they attacked the country's oil facilities, which set off some concerns about supply.
For the day, the S&P energy index was up 1.3 percent, while Occidental Petroleum (OXY.N) jumped 2.9 percent to $66.13.
On the Nasdaq, Microsoft Corp (MSFT.O) advanced 2.2 percent to $23.86 after Deutsche Bank raised its price target on the stock to $30 from $22.
Trading volume was below average on the New York Stock Exchange, with about 1.06 billion shares changing hands, far below last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 2.04 billion shares traded, below last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by 3 to 2 while on the Nasdaq, the opposite trend prevailed, with about five stocks falling for every four that rose.
(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)
NEW YORK (Reuters) –
Enterprise Products Partners LP (EPD.N) said on Monday that Teppco Partners LP (TPP.N) had accepted a sweetened $3.3 billion takeover bid in a deal that will form the largest publicly-traded U.S. pipeline network.
The transaction, which requires the approval of Teppco unit-holders as well as regulatory clearance, is expected to close sometime in the fourth quarter, Enterprise said.
The announcement of the deal, which will form a 48,000-mile network of pipelines transporting crude, refined products and natural gas, sent Teppco units up 5 percent to close at $30.12 on the New York Stock Exchange. Enterprise Products slipped 1.3 percent to $24.96.
Both companies are master limited partnerships run by general partners owned by the same entity, Enterprise GP Holdings LP (EPE.N). Enterprise Products is controlled by Dan Duncan, Houston's richest man, and a partnership controlled by Duncan bought a significant stake in Teppco in 2005.
Analysts said the merger is a step toward Duncan consolidating control over existing North American oil and gas pipeline networks.
"This reflects the growing importance of the oil and gas transportation industry," said Antoine Halff, vice president of research for the Newedge Group. "Oil and gas transport are increasingly linked to each other.
"Not just because some consumers are switching from oil to gas, but also because the oil industry itself has become a very large natural gas and natural gas liquids consumer."
Under an exchange of units, Enterprise will pay the equivalent of $31.36 per unit of Teppco, a premium of 9.3 percent over Friday's closing price. In April, Teppco had rejected a proposed $2.75 billion takeover offer from Enterprise.
Unit holders of Teppco will receive 1.24 Enterprise common units for each of their units.
"It will become the largest partnership and with that it increases its scale of opportunities and will have a lower cost of capital," said analyst Ralph Pellechia with Fitch Ratings.
"The new partnership would transport a full range of products including oil. It will gain storage capacity, which has been profitable because of a contango in oil markets," he said. "Even when storage isn't as profitable, the partnership will own pipelines to transport the crude."
William Eddleman, of Argus Research in Houston, said there was a 90-percent chance of the deal going through. "The only thing that might stand in the way ... is if the Department of Justice decides to look at it for antitrust issues.
"It really becomes a huge consortium. It would probably be bigger than Kinder Morgan (KMP.N) and the market would be made up of two giants," he said.
He noted Enterprise is primarily a natural gas and natgas liquids pipeline and storage company so this would expand it into the oil business and into refined chemicals too.
"It creates a giant with extensive penetration into the Northeast, Midwest and other regions," he said.
The deal comes as values for the tax-friendly master limited partnerships rebound from a sell-off that saw many of them lose more than half their value last year.
The combined company would hold 48,000 miles of oil and natural gas pipelines; more than 200 million barrels of oil, oil products and natural gas liquids storage; and 27 billion cubic feet of natural gas storage.
The merged company would generate cost savings of at least $20 million and be accretive in 2010, Enterprise Chief Executive Officer Michael Creel said in a statement.
Master limited partnerships are a favored structure in the energy industry for many fee-based assets, such as pipelines and storage tanks. The partnerships do not pay corporate taxes and distribute nearly all their profits to their unit holders.
The banks that advised the main parties in the merger deal include Barclays Capital, Credit Suisse and Morgan Stanley. Barclays advised Enterprise.
(Additional reporting by Matt Daily and Bruce Nichols; Editing by Lisa Von Ahn, Phil Berlowitz, Tim Dobbyn)
NEW YORK (Reuters) –
American International Group Inc (AIG.N), the insurer rescued by a series of federal bailouts, is set to pad out its shrinking board on Tuesday when a new slate of directors stands for election at its annual meeting.
The nominees will help rebuild a board decimated in the past year by seven resignations, one retirement and three other directors not standing for re-election.
The meeting, to be held on Wall Street, will be the first public opportunity for shareholders to vent frustration since the insurer's financial implosion last year.
Shareholders were all but wiped out as AIG recorded $99 billion in losses last year, largely stemming from a financial product unit's foray into risky derivatives. Shares have plummeted to just above $1 following the dilutive effect of the government's move to take majority ownership.
AIG had delayed its annual meeting, usually held in May, to allow time to reshuffle directors. The board that emerges will feature many new faces.
Apart from George Miles and Morris Offit, who have served as directors since 2005, the 11-member board will have been entirely elected within the last year.
Joining the board since 2008 were Suzanne Nora Johnson, a former Goldman Sachs (GS.N) vice-chairman; Dennis Dammerman, former General Electric Co (GE.N) finance chief, and Ed Liddy, chief executive and chairman, although he plans to stand down as soon as successors are found.
The rest of the board will be comprised of nominees: Harvey Golub, Laurette Koellner, Christopher Lynch, Arthur Martinez, Robert S. (Steve) Miller and Douglas Steenland.
The new board reflects the muscle wielded by federal authorities since taxpayers ponied up billions of dollars to keep AIG afloat. Trustees appointed to have oversight of the government's 80 percent stake in AIG wanted to shake up the board to raise corporate governance standards, they said last month.
At least seven of the new directors were recommended by either the U.S. Treasury or the trustees.
In a May statement, Liddy said "adding these individuals to the AIG Board will help AIG achieve its goals of maximizing the value of AIG's core businesses and repaying U.S. taxpayers."
Dammerman, tapped by government officials to join AIG's board last November, is leading the search for a new chairman and CEO.
AIG is to hold the shareholder meeting at its 72 Wall Street building, adjacent to 70 Pine Street headquarters. It recently agreed to sell both buildings, although it still occupies them for now.
Alongside prime real estate sales, AIG has been trying to find buyers for many of its businesses around the world. It needs to raise enough to pay off some $83 billion in federal loans.
Last week AIG said it had finalized a deal to give the New York Federal Reserve stakes in two large life insurers, a development expected to reduce the debt eventually by about $25 billion.
The units are being positioned for initial public offerings, as is AIG's large global property-casualty division, AIU Holdings. Other AIG asset sales have included much of its stake in reinsurer Transatlantic (TRH.N), a U.S. personal lines business and other units in Switzerland, Mexico, Thailand and Russia.
(Reporting by Lilla Zuill, editing by Matthew Lewis)