May 27 - Summary: An offer for Hillshire Brands from Pilgrim's Pride, along with signs of a pick-up in housing, consumer confidence, and durable goods orders, led the S&P 500 to another lifetime closing high. Conway G. Gittens reports.
U.S. stocks up on Tuesday, with the S&P 500 hitting a record high on the latest round of M&A and the possibility of rate cuts in Europe. Small caps and tech led the rally with the Nasdaq up 1.2 percent, a smaller gain for the Dow. Pilgrim's Pride, the world's second largest chicken producer, bidding a $6.4 billion all-cash offer for Hillshire Brands, the maker of Jimmy Dean sausages, Ball Park franks and deli meats. One condition: Hillshire has to ditch the $4.3 billion offer for Pinnacle Foods it made couple of weeks ago. Shares of Hillshire surged to a multi-year high, while shares of Pinnacle slumped more than five percent. Pfizer is giving up on its $118 billion pursuit of AstraZeneca with AstraZeneca not willing to budge. Shares of Pfizer slightly higher on the news, and AstraZeneca moved lower by a similar amount. Investors had many pieces of economic data to sort through. Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, unexpectedly rose in April. Consumer confidence perked up in May, supporting views of a rebound in economic growth. Home prices moved higher in March and were up 12 percent year-over-year in 20 metropolitan cities, according to the S&P Case Shiller Index. But David Blitzer sees caution ahead. SOUNDBITE: DAVID BLITZER, CHAIRMAN AND MANAGING DIRECTOR, S&P DOW JONES INDEX COMMITEE (ENGLISH) SPEAKING: "The underpinnings of housing is not quite as strong as the prices make it look like. We've seen sales turn in some mixed numbers. They're not going up and up. We hear problems about getting mortgages for some people. We hear consumers, in some cases, have a lot of debt from buying cars and from student loans, tending to temper the availability of mortgages. We saw during the winter a lot of buying-to-rent by large corporations. As prices have moved up, that's faded. That's taken away a little bit of strength out of the market, especially at the low end. So, all in all, prices are likely to continue to rise, but we are not going to see these double digit increases forever." The data, seen mostly as upbeat, pressured safe-haven assets, including gold, which slipped two percent to a 3-1/2 month low. In Europe, all signs coming out of the region point to a rate cut by the European Central Bank at next week's meeting. Meanwhile, little fallout from voting in Ukraine over the weekend, gave European equities the juice they needed to move up.