Stockwatch July 2007 - Wall Street Gains on Merger Activity
A slew of mergers and acquisitions fueled an upsurge in the market this trading session ended May 31, 2007. The upswing carried the Dow industrials to new heights and the slow-moving S&P 500 Index to its first record high in seven years near May’s end. Among the acquisition notices was China’s $3 billion investment in private equity consortium Blackstone Group, but that announcement was not alone in the flurry of mergers - an indicator of investors’ buoyant mood. Even a report that showed the first quarter of 2007 as the worst in four years didn’t dampen enthusiasm. “I think the worst is behind us,” said Richard Yamarone, economist at Argus Research. “While we did have a miserable quarter in the first three months of the year, it doesn’t look like it will be repeated any time soon.”
The PCI Manufacturers’ Stock Index continued its climb, adding 91.11 points, or 6.96 percent, almost topping 1400 to end at 1399.88. Advancing issues clearly outweighed declining issues at a 9-to-1 count.
BASF continued its dominance from last month’s Suppliers’ Index, adding 11.28 points, or 10.03 percent in its two-month run-up. BASF was the top dollar gainer on its first-quarter profitability, as mentioned last month, and was the top dollar gainer again this session.
The second dollar gainer and top percentage gainer was PPG, which reported record quarterly sales, and earnings of $194 million, or $1.17 per share, compared to $184 million, or $1.11 per share in the year-ago quarter. Analysts polled by Thomson Financial were expecting earnings of $1.08 per share. Sales were up 11 percent, to $2.9 billion. PPG said sales of paint and specialty materials overcame a slump in auto glass sales and commodities chemicals. PPG also rose on news that it is looking at alternatives for its auto glass and fine chemicals divisions. PPG jumped 8.85 points, or 12.59 percent, and closed at 79.16.
Despite reporting a return to profitability for its quarter ended Feb. 28, RPM International was the only decliner in the index this month, and therefore the top dollar and percentage loser. RPM reported net earnings of $10.1 million, or $0.08 per share, compared with a loss of $2.7 million, or $0.02 per share in the same quarter last year. Last year’s results included a $15 million charge related to asbestos reserve contributions. Revenue was up 11 percent for the quarter, to $679.5 million. RPM slid 0.38 points, or 1.65 percent, and closed at 22.72.