NEW YORK -- Stocks on Tuesday again broke records as investors returned from a long weekend hungry for deals. While Kraft Heinz and Unilever couldn't complete a proposed $143 billion merger, makers of food and household goods rose as investors bet that other deals are coming.
Companies that make packaged foods, everyday household items and other consumer goods are usually seen as stable investments and rarely take center stage on Wall Street. But on Tuesday they did just that, as investors felt the failed Kraft Heinz-Unilever merger will be replaced by other deals. Oreo maker Mondelez and jam maker J.M. Smucker made the largest gains.
Stocks built on their gains over the last two hours of trading. Income-seeking investors also bought shares of real estate investment trusts and utilities.
The Dow Jones industrial average climbed 118.95 points, or 0.6 percent, to 20,743. The Standard & Poor's 500 index rose 14.22 points, or 0.6 percent, to 2,365.38. The Nasdaq composite gained 27.37 points, or 0.5 percent, to 5,865.95. All three indexes are at record highs after rising nine times in the past 10 trading days. The Russell 2000 index of smaller companies added 10.48 points, or 0.7 percent, to 1,410.34, also a record.
U.S. markets were closed Monday for Washington's Birthday.
Kraft Heinz and Unilever both slumped after Kraft withdrew a $143 billion offer to buy its rival. Unilever said the offer was too low, and the companies said Kraft Heinz was giving up its effort. Unilever, the maker of Hellman's, Lipton and Knorr, declined $3.66, or 7.5 percent, to $44.87. Kraft Heinz, which owns brands including Oscar Mayer, Jell-O and Velveeta, gave up $1.78, or 1.8 percent, to $94.87.
Kevin Grundy, an analyst for New York-based Jefferies & Co., said the Kraft Heinz-Unilever talks surprised Wall Street because Unilever gets most of its revenue from household products, not food. With the Unilever talks apparently done, analysts think Kraft Heinz is still interested in buying another company. The analysts wonder whether Kraft Heinz will pursue a different consumer products company or stick to the food industry.
Grundy added that Unilever's shareholders might push that company to make a deal, as well.
Kraft Heinz, which is mostly owned by 3G Capital and Warren Buffett's Berkshire Hathaway, has a reputation for slashing costs to make bigger profits.
Shares of Mondelez, which was once part of Kraft, climbed 5.8 percent, and J.M. Smucker rose 4.4 percent. Cereal makers General Mills and Kellogg gained 3 percent and 2.5 percent, respectively. Household goods makers Colgate-Palmolive, Kimberly-Clark and Clorox all jumped.
Benchmark U.S. crude oil rose 66 cents, or 1.2 percent, to $54.06 per barrel in New York. Brent crude, used to price international oils, added 48 cents to $56.66 a barrel in London.
Bond prices slipped. The yield on the 10-year Treasury note rose to 2.43 percent from 2.42 percent.
Gold dipped 20 cents to $1,238.90 an ounce. Silver lost 3 cents to $18 an ounce. Copper rose 4 cents to $2.75 a pound.
Business on 02/22/2017