Wall Street boosted by radio deals

US stocks recovered early losses to trade modestly higher at mid-afternoon on Tuesday, boosted by a string of corporate deals including a proposed merger between XM and Sirius, the satellite radio operators.

The lift from the M&A activity was offset by a sharp fall in oil prices that depressed the energy sector. Shares in ExxonMobil were 1 per cent lower at $74.57 while Baker Hughes, the oil services group, was 2.5 per cent softer at $63.45.

Wal-Mart saw its shares gain 3 per cent to $49.94 on the back of better-than-expected quarterly results and upbeat guidance from the retailer.

But shareholders in Home Depot fared less well, after the home improvement chain said its quarterly profit fell 28 per cent because of the weak US housing market. Shares in Home Depot stood 0.2 per cent weaker at $41.34.

Morgan Stanley cut its recommendation on JetBlue’s stock after a bad week in which the airline’s operations were crippled by a snowstorm, leaving some passengers stranded.

David Neeleman, chief executive, said the cost of the disruptions might be more than $30m, sending shares in JetBlue down 4.8 per cent to $12.90.

Investors reacted positively to news of a possible merger between XM and Sirius, the US satellite operators, in spite of uncertainty over regulatory hurdles.

The deal is described as “a merger of equals” which gives shareholders in Sirius and XM an equal stake of the combined group that would include radio shows by Oprah Winfrey and Howard Stern, the shock-jock. Regulators would need to assess whether combining the only two groups permitted to offer satellite radio in the US would be in the public interest. For the deal to be sanctioned, the Federal Communications Commission would have to overturn its own rule prohibiting such a merger.

Shares in Sirius and XM were up 6.4 per cent and 12.6 per cent respectively to $3.94 and $15.74. This helped to lift the tech-led Nasdaq Composite 0.4 per cent to stand at 2,506.38.

In other deal news, Vulcan Materials, which makes roadbuilding materials, said it had agreement for a $4.6bn cash and stock offer to buy Florida Rock Industries. Shares in Florida Rock were up 41.8 per cent to $66.60 while shares in Vulcan were 0.6 per cent down at $111.16.

Meanwhile, Shire, the UK drugs group, said it had agreed to buy New River Pharmaceuticals, its US partner, for $2.6bn in cash.

The moves gives the UK company full control of Vyvanse, the two groups’ new drug for attention deficit disorder. Shares in New River were 8.5 per cent higher at $63.32.