Last updated: September 17, 2013 11:48 pm

Safeway ‘poison pill’ boosts shares

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The S&P 500 neared a record high after US equities ticked up in trading on Tuesday, led by a rise in Safeway shares following the company’s adoption of a “poison pill” provision.

The US grocery group said it had implemented a shareholder rights plan, which allows the company to distribute new shares to existing stockholders if more than 10 per cent of the company is acquired by a particular group or investor.

Safeway said that the company “has become aware of an accumulation of a significant amount of the common stock of the company”. Later in the day, hedge fund Jana Partners disclosed in a filing with US regulators that it had amassed a 6.2 per cent stake in Safeway.

The plan, if implemented, would dilute shares, making a takeover much more difficult – a move commonly referred to as a “poison pill”.

The news sent shares in Safeway 10.5 per cent higher to $30.99, up 71.3 per cent on the year to date.

The S&P 500 added 0.4 per cent to 1,704.76, closing above the 1,700 level for the first time since early August. The broad uptick was led by the information technology, consumer discretionary and energy sectors, each up 0.6 per cent.

The Nasdaq led the major indices, up 0.8 per cent to 3,745.70 - its highest close since September of 2000 - as a rebound in Apple shares boosted the tech benchmark.

Shares in the iPhone maker added 1.1 per cent to $455.18. Apple shares have struggled since the company’s event last week that launched a new round of iPhones, off 10 per cent in that time.

Facebook shares gained 5.9 per cent to $45.02 to close at a new record high and are now up 85 per cent since its July earnings report convinced investors that the social network was making inroads on mobile advertising.

The announcement of a new $40bn share repurchase plan from Microsoft sent shares in the maker of Windows software up 0.4 per cent to $32.93.

General Motors added to an already stellar 2013 run with a 1.4 per cent rise to $36.71. The automaker said it was developing an electric car with an extended range to compete with Tesla. GM shares are up 54 per cent in the past 12 months.

Semiconductor manufacturer Broadcom rose 2 per cent to $27.44 after Susquehanna upgraded the company to “positive” from “neutral”.

JPMorgan shares barely budged on news that the bank was in talks to pay at least $800m to settle with securities and bank regulators over the $6bn “London whale” trading loss”. The bank’s chief executive, Jamie Dimon, also put out a memo on Tuesday morning detailing an overhaul of the bank.

Shares in the bank were down fractionally to $53.09

The Dow Jones Industrial Average added 0.2 per cent to 15,529.73.

The materials sector, which has struggled through much of 2013, has found favour with investors during the September rally, up 5.1 per cent so far this month. The area has been led by Allegheny Technologies , which is up 15.7 per cent in September thanks to the sale of its tungsten materials business for $605m.

Not far behind is US Steel , which has added 14.6 per cent, and miner Freeport-McMoRan , up 11 per cent.

The rise comes amid renewed optimism for the global economy, particularly in China, which is a major consumer of raw materials.

However materials were the main laggards, with the sector off 0.2 per cent on the day, as investors looked forward to Wednesday’s Federal Open Market Committee meeting.

While many Fed watchers are predicting that the meeting will result in the start of a plan to scale down the quantitative easing programme, investors seem to have little concerns about any impact on equities.

The S&P 500 sits less than 1 per cent off all-time highs, up 4.4 per cent on the month, while the Nasdaq Composite Index has reached levels not seen since September 2000.

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