U.S. stocks gain on corporate merger despite looming sequester
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E-mail Xinhua, February 20, 2013
The U.S. stocks traded higher on Tuesday in a holiday-shortened week, buoyed up by a possible merger of two major office-supply retailers, as investors took the looming sequester cuts in stride.
The market was closed on Monday for the Presidents Day holiday.
Shares of Office Depot and OfficeMax surged on Tuesday after the opening bell, on speculation that the two rival office-supply chains are in talks for a merger that will create a stationery giant to challenge the current no. 1 Staples.
Shares of Office Depot soared over 30 percent to an intraday high of 6.10 dollars apiece, while OfficeMax also jumped 26 percent to 13.57 dollars.
Meanwhile, the U.S. federal government's automatic spending cuts will take effect in just 10 days, but the Senate and the House voted to recess for the Presidents Day week, which means Congressional lawmakers will have only four days to tackle the sequester upon their return.
Last Thursday, Senate Democrats unveiled a plan to avoid the cross-the-board budget sequester. According to the proposal, the 110-billion-U.S.-dollar spending cuts for this year will be split evenly between getting new revenue and slashing spending in agricultural and defense sectors.
But the proposal would supposedly be opposed by Republicans because it includes a 10-year payroll tax hike totaling 54 billion dollars.
On the economic front, U.S. builder confidence remained flat in February. The Housing Market Index went down one point to 46, slightly lower than January's unchanged figure of 47, the National Association of Home Builders and Wells Fargo Housing Market said in a joint report.
The reading was lower than analysts' expectation of an increase to 48, indicating that the U.S. housing market has been losing momentum since the beginning of this year.
In midday trading, the Dow Jones Industrial Average gained 49. 98, or 0.36 percent, to 14,031.74. The S&P 500 Index gained 7.85, or 0.52 percent, to 1,527.64. The Nasdaq Composite Index added 11. 70, or 0.37 percent, to 3,203.73. Endi
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