Stocks climb after AIG agrees to sell Asian division; Manufacturing growth slows in Feb.By Stephen Bernard, AP
Monday, March 1, 2010
Stocks rise on AIG deal; Manufacturing grows
NEW YORK — Stocks are higher after AIG announced its biggest asset sale since being rescued by the government. A report of continued growth in manufacturing also lifted the market.
The Institute for Supply Management says Monday that its manufacturing index fell to 56.5 in February from 58.4 in January. The reading is below the 58 economists predicted. But the report finds that employment in manufacturing is improving.
Stocks rose after AIG agreed to sell its Asian life insurance business to Britain’s Prudential PLC for $35.5 billion. The deal is a sign of confidence in the economy.
The Dow Jones industrial average is up 76 at 10,402. It had been up 38 ahead of the report. The Standard & Poor’s 500 index is up 9 at 1,114. The Nasdaq composite index is up 26 at 2,264.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
NEW YORK (AP) — Stocks rose early Monday following AIG’s biggest asset sale since being rescued by the government and reports of a new bailout package for Greece.
Investors are also preparing for a key report on the manufacturing sector.
Overseas markets rallied on growing hope that European nations will announce a bailout deal to help Greece with its mounting debt problems. Stocks around the world have been hurt in recent weeks because of concerns debt problems in Greece would spread to other countries and upend any possibility of a global recovery.
European Union and Greek officials are meeting and a deal could be hammered out soon that would involve state-owned banks in Europe buying Greek government bonds. Greece must roll much of its debt in the coming months.
The market is also getting a lift after American International Group Inc. agreed to sell its Asian life insurance business to Britain’s Prudential PLC for $35.5 billion. It’s the biggest deal yet made by AIG since it received multiple bailout packages from the government during the credit crisis.
AIG, based in New York, had been planning to sell the division, known as AIA Group, as part of its ongoing plans to streamline operations and repay the government. As of Dec. 31, AIG’s outstanding assistance from the government totaled $129.26 billion.
AIG reported disappointing fourth-quarter results Friday, which tempered gains in the market.
In early morning trading, the Dow Jones industrial average rose 48.30, or 0.5 percent, to 10,373.56. The Standard & Poor’s 500 index rose 6.00, or 0.5 percent, at 1,110.49, while the Nasdaq composite index is up 14.67, or 0.7 percent, at 2,252.93.
AIG shares jumped $2.37, or 9.6 percent, to $27.14.
Traders will also get a key reading on the manufacturing sector. The Institute for Supply Management’s closely watched manufacturing index likely fell in February to 57.5 from a reading of 58.4 a month earlier, according to economists polled by Thomson Reuters. Any reading above 50 indicates growth. The report is due to be released at 10 a.m. EST.
The manufacturing sector has steadily improved in recent months as the economy begins to recover.
The ISM releases its service-sector index reading on Wednesday.
A separate report released before the market opening Monday showed personal income rose 0.1 percent in January, short of the 0.4 percent expected by economists. However, spending grew faster than forecast, rising 0.5 percent, the Commerce Department said. Economists had forecast spending would rise 0.4 percent.
It was the slowest growth in income in fourth months, which could slow spending in the future. Consumer spending accounts for about 70 percent of U.S. economic activity.
Tags: Europe, Geography, Greece, Manufacturing Sector Performance, New York, North America, United States, Western Europe