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U.S. Stocks Rally as Consumer Spending Tops Estimates and AIG Sells Asian Unit

Strategic Insights

— 2 min read

Consumer spending rose for the fourth straight month in the U.S., surpassing economists' estimates, and American International Group Inc. announced the sale of its Asian unit, AIA Group Ltd., to Prudential Plc for $35.5 billion. This positive news boosted the Standard & Poor's 500 Index, which erased its 2010 loss, and other benchmark indexes also extended their gains. The Dow Jones Industrial Average climbed 78.53 points, or 0.8 percent, to 10,403.79, while the S&P 500 advanced 1 percent to 1,115.71. Stocks like AIG, Millipore Corp., and OSI Pharmaceuticals Inc. saw significant gains after takeover offers and the sale of the AIG unit. The Commerce Department's report on personal spending and the Institute for Supply Management's manufacturing gauge provided a positive assessment of the economy, with readings above 50 signaling expansion.

Key Takeaways:

  • The Standard & Poor's 500 Index erased its 2010 loss after consumer spending topped economists' estimates, rising 0.5 percent to surpass a four-month trend.
  • American International Group Inc. sold its AIA Group Ltd. to Prudential Plc for $35.5 billion, with the British insurer paying $25 billion in cash and $10.5 billion in stock and other securities.
  • AIG shares climbed 4.1 percent to $25.78, and the company's sale is expected to exceed the total of over 20 other deals announced as part of its efforts to repay a 2008 government bailout.
  • The Dow Jones Industrial Average climbed 78.53 points, or 0.8 percent, to 10,403.79, with the S&P 500 advancing 1 percent to 1,115.71.
  • Stocks like Millipore Corp. and OSI Pharmaceuticals Inc. surged on takeover offers, with Walt Disney Co. pacing gains in consumer companies after the Commerce Department's report on personal spending.
  • The Institute for Supply Management's manufacturing gauge slipped to 56.5 in February, but still signaled expansion, with over 50 readings indicating growth.
  • Analysts, such as Bruce McCain of Key Private Bank and Bruce Bittles of Robert W. Baird & Co., saw the positive economic indicators as signals that the trend for stocks is higher and that the economy is doing better.

Statistics:

  • The Standard & Poor's 500 Index advanced 1 percent to 1,115.71.
  • The Dow Jones Industrial Average climbed 78.53 points, or 0.8 percent, to 10,403.79.
  • AIG shares climbed 4.1 percent to $25.78.
  • The Institute for Supply Management's manufacturing gauge slipped to 56.5 in February.
  • Personal spending rose 0.5 percent to surpass a four-month trend.
  • Over 20 other deals have been announced by AIG as part of its efforts to repay a 2008 government bailout.

Sources:

  • Euclid Infotech Pvt. Ltd.
  • Syndigate.info an Albawaba.com company

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