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US stocks rise despite sanctions, deal disappointments

US stocks on Wednesday (Aug 6) edged higher despite new Russian sanctions against the West and amid disappointing news that major potential media and telecom mergers fizzled.

NEW YORK: US stocks on Wednesday (Aug 6) edged higher despite new Russian sanctions against the West and amid disappointing news that major potential media and telecom mergers fizzled.

The Dow Jones Industrial Average gained 13.87 points (0.08 per cent) to 16,443.34. The broad-based S&P 500 was essentially flat, rising 0.03 of a point to 1,920.24, while the tech-rich Nasdaq Composite Index rose 2.22 points (0.05 per cent) to 4,355.05.

Russian President Vladimir Putin slapped one-year bans and limits on food and agricultural imports from nations that have imposed sanctions on Russia over its defiant stance on Ukraine.

Meanwhile, Rupert Murdoch's 21st Century Fox withdrew a bid estimated at US$80 billion to acquire Time Warner. Time Warner sank 12.0 per cent, while Fox rose 3.3 per cent.

US wireless carrier Sprint abandoned a US$32 billion campaign to acquire T-Mobile because of regulatory concerns, the Wall Street Journal reported. Sprint plummeted 19.0 per cent, while T-Mobile lost 8.4 per cent.

Jack Ablin, chief investment officer at BMO Private Bank, said Wednesday's trade was a "minor victory" for US stocks given that both the Russia sanctions and the merger news were disappointments for the market.

"The US appears to be more of a safe haven," Ablin said. Investors are trying to "cozy back up to the US where there is economic growth and where our economy is somewhat insulated from the geopolitical confrontations that are going on."

Drugstore chain Walgreens plummeted 14.3 per cent as it announced it will buy the remaining 55 per cent of British drugstore chain Alliance Boots in a deal worth US$5.29 billion in cash, plus nearly US$10 billion more in stock. Analysts said they were disappointed with Walgreens' profit forecast.

Bank of America advanced 1.3 per cent as it boosted its quarterly dividend to five cents per share from a penny, its first dividend increase in seven years. The news came after the US Federal Reserve approved the capital distribution after previously blocking the bank's plan.

Bond prices were mixed. The yield on the 10-year US Treasury dipped to 2.47 per cent from 2.48 per cent on Tuesday, while the 30-year held steady at 3.28 per cent. Bond prices and yields move inversely.

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