Monday Wrap: Markets Climb Ahead of Fed

Includes: DIA, QQQ, SPY
by: Roy Mehta

Buyers were in control Monday, as investors await positive news from Tuesday's Fed announcement. The Dow Jones Industrial Average gained 101.5 points (+0.74%), Standard & Poor's 500 index increased 11.3 points (+0.75%), and the Nasdaq climbed 12.8 points (+0.47%). Volume was not significant on the NYSE at 1.13 billion shares as expected the day before a big announcement, and advancers beat decliners by a ratio of about 2:1.

UBS (UBS, +2.3%) had two major announcements strategically released together. The Swiss bank said it would write down an additional $10 billion to reflect losses in subprime exposure, and also said it has reached a deal to sell a stake in the bank for more than $11 billion to investors in Singapore and the Middle East (full story). Bond insurer MBIA (MBI, + 13.2%) jumped on news it will get $1 billion from an investment from Warburg Pincus. In economic news, Pending Home Sales increased unexpectedly for the second month in a row (full story). The U.S. 10-year Treasury note fell 10/32 in price, now yielding 4.15%.

All sectors finished with gains, with financials (+1.4%) increasing the most. Crude fell $0.46 to $87.87. There were a couple major M&A stories announced Monday. MGI Pharma (MOGN, +19.6%) agreed to be bought by Japanese drug maker Eisai (full story) for $3.9 billion. Adams Respiratory Therapeutics (ARXT, +35.8%) jumped after England's Reckitt Benckiser said it would buy the OTC drug maker for $2.3 billion (full story). Also, McDonald's (MCD, +2.9%) climbed after it said global comparable store sales jumped by 8.2%.

Besides the FOMC Announcement (2:15 PM), Wholesale Trade (10:00 AM) will also be released Tuesday. The Fed is expected to ease by 25 basis points.

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