May 29 - Summary: The S&P 500 settles at its third record in four sessions; Tyson shakes up food industry with rival bid for Hillshire Brands; Sprint, T-Mobile close to deal -sources; Economists predict Q2 rebound. Conway G. Gittens reports.
The art of the deal is making a new record for the S&P 500 a steal. The Dow and the Nasdaq were higher too as the well of potential dealmaking continues to be robust. Sprint and T-Mobile are closer to hooking up, according to sources. Softbank, the parent of Sprint, has convinced Deutsche Telekom, the parent of T-Mobile USA, that a merger of America's third and fourth largest wireless carriers makes sense. No terms have been leaked yet, but Deutsche Telekom is hoping to retain a small stake in the merged entity if the deal gets done, our sources say. One big hurdle to clear: U.S. regulators have frowned on telecom mergers - but may be friendlier to this potential deal. Sprint and T-Mobile US were both up on the day, but bigger rivals Verizon and AT&T were mixed. Tyson Foods joins a supermarket brawl. The company is offering $6.8 billion to buy Hillshire Brands, besting a $6.4 billion offer made by Pilgrim's Pride just two days ago. Also in the mix, Pinnacle Foods, which Hillshire offered to buy for more than $4 billion. But Tyson nor Pilgrim's are interested in Pinnacle, leaving that frozen food company out in the cold. Investors smell a bidding war - sending shares of Hillshire to fresh multi-year highs. Tyson rallied 6 percent. Pilgrim's Pride fell one percent. Pinnacle gained less than that. The U.S. economy contracted for the first time in three years, but Wall Street says so what. Barclays' senior U.S. economist Michael Gapen expects a solid bounce back to three percent growth this quarter. SOUNDBITE: MICHAEL GAPEN, SENIOR U.S. ECONOMIST, BARCLAYS (ENGLISH) SAYING: "The weather has obviously passed and the general underlying trends still look fairly solid. Consumption, after all, did rise three percent in the quarter. The consumer is in a better position. Household balance sheets look stronger. Labor markets are gradually firming, so that, with a still accommodative backdrop from policymakers, leads us to think that you will get an acceleration in growth in the second quarter." Along those lines, a measure of unemployment claims falling to its lowest since August 2007. In European action: stocks drifted little from six-year highs as investors expect a European Central Bank rate cut next week.