Danone's Petit Ecolier biscuits on display
July 3 (Bloomberg) -- U.S. stocks gained for a second day after factory orders fell less than forecast and Kraft Foods Inc.'s $7.2 billion takeover bid for a unit of Groupe Danone SA fanned speculation mergers will extend this year's rally.
Wendy's International Inc., the third-biggest hamburger chain, advanced the most in two months after billionaire investor Nelson Peltz said he may make a bid for the company. Apple Inc. jumped to a record after Goldman, Sachs & Co. said the iPhone sold twice as fast as forecast.
Mergers and acquisitions carried the Standard & Poor's 500 Index to a record June 4 before the highest interest rates in five years helped push the benchmark down 1.3 percent. A government report today showing factory orders fell by less than half the rate economists forecast reinforced expectations that manufacturing will fan economic growth.
``We're seeing that the economy is still growing and corporate profits will be strong,'' said Hans Olsen, who oversees $34 billion as chief investment officer at Wilmington Trust Boston in Boston. ``The deals are psychologically great for the marketplace.''
The S&P 500 added 3.02, or 0.2 percent, to 1522.45 as of 11:49 a.m. in New York. The Dow Jones Industrial Average gained 26.83, or 0.2 percent, to 13,562.26. The Nasdaq Composite Index increased 7.58, or 0.3 percent, to 2639.88.
U.S. stock markets will end trading at 1 p.m. today and be closed tomorrow for the Independence Day holiday.
Kraft Foods slipped 57 cents to $34.96. The world's largest cookie maker offered 5.3 billion euros ($7.2 billion) for Danone's biscuit unit to become the market leader in France, Italy and Poland. Paris-based Danone said it's in exclusive talks with Kraft and an agreement may be reached by the fourth quarter of this year.
Factory Orders
Orders placed with American factories fell 0.5 percent in May, the Commerce Department said, as demand for computers, electronics and fuel helped make up for a decline in aircraft bookings. Orders were forecast to retreat 1.2 percent, according to a Bloomberg survey of economists.
Wendy's International Inc. surged $1.11 to $38.50. Peltz said his Triarc Cos. investment company is considering a bid for Wendy's. Triarc, which operates the Arby's chain of restaurants, requested information on financing being offered by Wendy's financial advisers.
Apple climbed $4.07 to $125.57. Goldman Sachs analyst David Bailey estimated shoppers took home 700,000 iPhones, twice his initial projection. Apple said on its Web site that 95 of 164 stores sold out of the combination mobile phone and music player. The iPhone sells at more than double production costs, reported research firm ISuppli Corp.
Thomas & Betts Corp. gained $2.56 to $61.62. Danaher Corp., the maker of Craftsman hand tools, agreed to sell its power quality division to the maker of electric components for about $280 million. Danaher Corp. added 75 cents to $77.31.
Avon, Caterpillar
Avon Products Inc. gained $1.04 to $37.79. The world's largest door-to-door cosmetics seller was raised to ``market perform'' from ``underperform'' by analysts at Sanford C. Bernstein & Co.
Caterpillar Inc. dropped $2.23 to $78.22. The world's largest maker of earthmoving equipment was cut to ``reduce'' from ``neutral'' at UBS AG, which said revenue growth will slow because of rising competition.
General Motors Corp. lost 22 cents to $37.80, while Ford Motor Co. fell 26 cents to $9.38. Automakers report June sales today.
GM and Ford probably posted lower U.S. sales in June after the carmakers trimmed low-profit transactions with rental-car companies, according to the average estimate of nine analysts in a Bloomberg survey.
In other economic reports, the National Association of Realtors' index of pending home resales dropped 3.5 percent to a five-year low of 97.7 in May. The unexpected decline came as buyers waited for lower prices and lenders made it harder to get mortgages. Economists in a survey expected the index to rise 0.5 percent.
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