US stocks rose sharply to rebound sharply from last week’s selloff lifted by news that Berkshire Hathaway would buy Precision Castparts Corp and hopes of a Chinese bailout package after more disappointing data.
The Dow Jones Industrial Average was most recently 225 points or 1.3% higher at 17,598.96 points to snap a seven session losing streak. All of the blue chip index’s 30 components ended higher.
The S&P 500 Index jumped 25 points or 1.1% to 2100.4 points with all ten of its key sectors trading higher led by energy and industrials.
The tech heavy Nasdaq Composite most recently traded was 50 points or 1.09% higher at 5,093.7 points.
“The market took their cues from China overnight and the Berkshire deal in another factor driving investor sentiment today,” Aaron Clark, a portfolio manager at GW&K Investment Management, which oversees about $25 billion, told Reuters.
Berkshire Hathaway Corp, owned by the worlds third richest Man, announced that it was going to acquire the airplane components and energy production equipment maker in a deal worth more than $32.2 billion.
This would be the biggest purchase made by the giant holdings conglomerate which is the biggest shareholder in Precision Castparts Inc with a 3% stake valued at $880 million.
Precision Shares jumped more than 19% on the deal which buoyed the industrial sector of the benchmark S&P 500 Index to a 1.9% jump.
Also lifting the market sentiment today were expectations that Beijing would increase its stimulus package after a deflation threat from its declining factory prices.
“One of the biggest fears in the marketplace is not so much the Fed, it’s the slowdown in China,” Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, told Bloomberg by phone.
“If all of a sudden people think the Chinese are going to have serious stimulus, that’s going to turn things around.”
To contact the reporter of the story: Samuel Rae at email@example.com