Wall Street rises as selling seen overdone

By Rodrigo Campos

NEW YORK (Reuters) – U.S. stocks rose in early trading Monday after six weeks of declines for the S&P 500 left indexes oversold and equities at more attractive levels.

In a sign that valuations are more enticing, deals in the insurance, apparel and communications technology sectors were announced since the market closed Friday.

The S&P 500 has tumbled nearly 7 percent on the back of a barrage of soft economic data after closing on April 29 at its highest level in nearly three years.

“The good news is that short-term momentum indicators are at an extreme oversold level and we are not seeing signs of a new bear market,” technical analysts at MF Global in New York said in a client note.

Worries about a global economic slowdown have hovered over equities markets, with investors expecting the S&P 500 to slip toward its March low near 1,250 before a rebound.

“The market has been oversold over the last six weeks, so a short-term rebound on short-covering is not out of the question,” said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

The Dow Jones industrial average rose 54.83 points, or 0.46 percent, to 12,006.74. The Standard & Poor’s 500 Index gained 5.94 points, or 0.47 percent, to 1,276.92. The Nasdaq Composite Index added 13.40 points, or 0.51 percent, to 2,657.13.

Insurer Allied World Assurance Co Holdings Ltd agreed to buy Transatlantic Holdings Inc for $3.2 billion in stock. Transatlantic jumped 13.3 percent to $49.84, while Allied fell nearly 1 percent to $57.57.

Also, VF Corp, owner of the North Face and Wrangler clothing brands, will buy shoemaker Timberland Co in a $2 billion deal. Timberland soared 42.5 percent to $42.73 and VF Corp added 12 percent to $103.

Diversified manufacturer Honeywell International Inc offered to buy EMS Technologies Inc for about $506 million to boost its presence in the mobile and satellite communication market. EMS shares gained 32.3 percent to $32.81.

“Merger activity is likely (to continue) because of the low interest rates, and it’s also attractive from an operational point of view,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York. “That will be a continued positive (for equities).” (Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)