Industrial production figures failed to send Wall Street into the red this afternoon, as acquisition news helped maintain optimism and boost stocks.
This afternoon's important manufacturing data was largely downbeat as figures showed that expansion in industrial production for August was lower than forecast, at just 0.2%. Car manufacturing firms in particular have scaled back their output amidst feelings that continuing job losses will lead to a sharp fall in consumer spending.
Also announced today, the Empire State manufacturing index for September fell from 7.10 to 4.14 – its lowest level in over a year. This suggests a loss of confidence in US recovery prospects amongst factory managers. Despite this news, the Dow Jones Industrial Average managed to bounce back from a sharp dip at the open to rise 0.28% by 4pm (London time) thanks to speculation on takeover bids in the food and technology sectors.
Top winners included leading US insurance firm Travelers Company, which gained 2.47% at $52.28, and Hewlett-Packard, which rose 1.50% to $39.88 after an Israeli newspaper reported that HP may be bidding for Tel-Aviv–based application delivery and network security firm Radware in an attempt to compete with Cisco Systems.
Kraft Foods saw its share price rise to $31.38 (+1.06%) on the back of its Cadbury acquisition after announcing today that it expects to gain $1 billion in incremental revenue synergies, including an increase in developing markets. Also on the up this afternoon were Pfizer, up 1.11% at $17.27, and McDonald's at $74.60 (+0.88%).
The energy sector was strongly represented at the base of the table today. Recent acquisitions had less than happy consequences for Exxon Mobil, which recently became the largest producer of natural gas in the US after purchasing XTO Energy and consequently received a downgrade from RBC Capital Markets. RBC cited the company's significant exposure to the weakening natural gas market as the primary reason for lowering the firm's rating from 'outperform' to 'sector perform'. This sent the share price down to to $60.72 (-0.48%) In a similar vein, Chevron was down 0.62% at $79.02 after announcing it is about to agree a deal with China National Petroleum to import natural gas from Australia.
European markets were less able to stave off the gloom. The downbeat figures from the US reverberated through old-world indices, sending them further downwards. By 4pm (London time) the FTSE 100 was at 5557.92, the German Dax was at 6272.46 and France's CAC 40 was at 3761.05.
