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TheStreet Open House

Stock Markets Soar on Trifecta of Good News

NEW YORK (TheStreet) -- Stocks recaptured positive territory thanks to a trifecta of good news on the penultimate day of first-quarter trading.

A deluge of big pharma M&A deals, residual goodwill from Federal Reserve Chair Janet Yellen's speech on Friday and signs China might introduce further monetary easing helped power broader markets higher.

The S&P 500 added 1.2% and the Dow Jones Industrial Average saw its biggest one day gain since early February, gaining 1.6% or 262 points. The Nasdaq popped 1.2%.

"Last week we saw a fairly significant pullback in the S&P 500. It was 3.3% from the intraweek high to the low," said BTIG Research chief technical strategist, Katie Stockton, in a telephone call. "The market is primed for some stabilization ... People that are bullish [want] to buy into weakness and I think that's what's happening today."

UnitedHealth (UNH - Get Report) was among the top performers on the Dow after announcing it would buy pharmacy-benefit management company Catamaran (CTRX - Get Report) for $12.8 billion, or $61.50 a share. UnitedHealth spiked 2.5%, while Catamaran surged 23.7%.

Israeli drugmaker Teva Pharmaceuticals (TEVA) announced it would buy Auspex Pharmaceuticals (ASPX) for $3.2 billion, or $101 a share in cash, a 42% premium to its recent close. Auspex climbed 41.5%.

Horizon Pharma (HZNP) rocketed 17.7% higher after announcing it will buy Hyperion Therapeutics (HPTX) for $1.1 billion. Small-cap Hyperion jumped 7.6%.

Positive momentum from Yellen's speech on Friday continued into Monday's session. Speaking at a conference in San Francisco, Yellen said a "gradual" return to the normal funds rate was likely and underlined that the central bank would move cautiously. Yellen said she expects conditions to "warrant an increase ... sometime this year."

"While she again confirmed rates are headed higher, she sounded a word of caution about the pace of future rate increases after the FOMC's initial move," said Chris Gaffney, president at EverBank World Markets. "Yellen is obviously trying to 'soften the blow' of the initial rate increase, setting the markets up for a change in policy but not wanting investors to read too much into the first rate hike in a decade."

China's Shanghai Composite rocketed 2.6% higher on Monday after the People's Bank of China cut down payments on second homes to 40% from 60%, a move to spark growth in the property sector. PBOC Governor Zhou Xiaochuan suggested on Sunday that the central bank had further "room to act," a hopeful sign of more monetary easing on the horizon.

Energy stocks led markets higher despite a decline in crude oil prices. Among the large-caps, Exxon Mobil (XOM), Chevron (CVX), Kinder Morgan (KMI), and Schlumberger (SLB) all moved higher, while the Energy Select Sector SPDR ETF (XLE) jumped 2.2%.

Crude oil prices fell as negotiations for an Iran nuclear deal closed in on the deadline. Six countries are discussing a nuclear deal in exchange for the removal of economic sanctions which, if approved, would likely lead to more crude added to global oversupply. West Texas Intermediate slid 0.7% to $48.53 a barrel.

Late Friday, Intel (INTC) surged more than 6% on reports it will buy fellow semiconductor company Altera (ALTR), according to The Wall Street Journal. If a deal comes to pass it would mark Intel's largest takeover yet. Intel and Altera were giving back some of Friday's gains on Monday.

Analog Devices (ADI) led the S&P 500 higher after Barclays upgraded the stock to overweight from equal weight. Analysts said they were more positive on the chipmaker on the belief it had secured multiple sockets in the next of Apple's (AAPL) iPad and iPhone models.

Netflix (NFLX) shares moved 2% higher on news the streaming company had added Anne Sweeney, former co-chair of Disney (DIS) Media Networks and Disney-ABC Television Group, to its board. Microsoft's (MSFT) executive vice president, Brad Smith, also joined the board.

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