Kerkorian Offer for GM Fuels Stock Rally

Wall Street rallied Wednesday after billionaire Kirk Kerkorian announced he plans to double his ownership in General Motors Corp. (GM)

The Dow Jones industrial average (search) soared 127.69 points, or 1.25 percent, to end at 10,384.64. The technology-laced Nasdaq Composite Index (search) was higher 29.16 points, or 1.51 percent, to close at 1,962.23, while the broader Standard & Poor's 500 (search) index settled up 14.48 points, or 1.25 percent, at 1,175.65.

The GM news was enough to boost the Dow and the S&P to close at three-week highs.

"GM is the biggest news today," said Todd Clark, head of listed trading at Wells Fargo Securities.

"GM stock was doing nothing but going down and this bid by Kerkorian is pretty impressive and actually suggests some underlying value in some of these older factory stocks that people had given up for dead."

Kerkorian's Tracinda Corp. (search) offer to GM, a Dow component, lifted shares $5.03, or 18.11 percent, to $32.80.

The GM news boosted U.S. auto parts makers such as Visteon Corp. (VC), which rose 16 percent, or 54 cents to $3.94, and Delphi Corp. (DPH), up 12.6 percent, or 43 cents at $3.85.

It also helped other cyclical stocks, sensitive to economic ups and downs, like construction machinery maker Caterpillar Inc. (CAT), which rose 2 percent, or $1.84 to $89.42, and appliance maker Maytag Corp. (MYG), up 3 percent to $10.27.

The announcement that the government is considering bringing back the 30-year Treasury rattled the bond market, sending the yield on the 10-year note to 4.19 percent, up from 4.17 percent late Tuesday. Prices of the existing 30-year Treasury also sank. The 30-year note, discontinued in 2001, could provide financing for the government in an era of record budget deficits; a decision is expected in August.

Markets largely shrugged off a reversal in the price of oil, which rebounded, erasing an earlier loss. Crude for June delivery settled 63 cents higher at $50.13.

In corporate news, Time Warner Inc. (TWX) added 60 cents to $17.28 after the world's largest media company said its first-quarter earnings rose slightly on growth at its cable networks, cable TV and several one-time gains. Per share earnings beat the consensus estimate of analysts surveyed by Thomson Financial by a penny a share.

MetLife Inc. (MET) surged 12 percent, or $4.71, to $43.55, after the insurance company announced a 65 percent surge in first-quarter profits over last year on strong gains across all its business lines. The company raised its full-year earnings forecast based on the strong results and its planned acquisition of Travelers Life & Annuity and most of the international insurance operations from Citigroup Inc.

Communications tower management firm American Tower Corp. (AMT) was down 1 cent at $17.20 after announcing plans to pay $3.1 billion in stock to acquire rival SpectraSite Inc. (SSI), a Cary, N.C.-based operator of wireless and broadcast signal towers. SpectraSite added 8.9 percent, or $5.00, to $61.20.

Genzyme Corp. (GENZ) was up 12 cents at $60.02 after announcing plans to acquire Bone Care International (BCII) in a deal valued at about $600 million. Bone Care soared 35 percent, or $8.28, to $32.11.

Aon Corp. (AOC) soared 15 percent, or $3.18, to $24.45 after the world's No. 2 insurance broker said first-quarter profit easily exceeded Wall Street forecasts, and a Merrill Lynch & Co. analyst raised his rating on the company.

Among decliners, Electronic Arts Inc. (ERTS), the world's largest video game publisher, fell 6.5 percent, or $3.45 to $49.45 a day after it reported a sharply lower profit.

The Russell 2000 index of smaller companies was up 10.74, or 1.84 percent, at 595.22.

Trading was heavy, with 1.8 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.93 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by about 3 to 1 and by about 7 to 3 on Nasdaq.

Overseas, Japanese financial markets were closed Wednesday for People's Holiday, a national holiday. Trading will resume on Friday after the annual "golden week" holidays. In Europe, France's CAC-40 rose 0.80 percent, Britain's FTSE 100 was up 0.44 percent and Germany's DAX index added 0.44 percent.

Reuters and The Associated Press contributed to this report.