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US stocks rise as Icahn discloses huge Apple stake

Trader Frederick Reimer works on the floor of the New York Stock Exchange Tuesday, Aug. 13, 2013. US stocks closed in positive territory Tuesday as corporate raider Carl Icahn revealed a large stake in Apple, sending the technology titan 4.8 percent higher. AP

NEW YORK CITY—US stocks closed in positive territory Tuesday as corporate raider Carl Icahn revealed a large stake in Apple, sending the technology titan 4.8 percent higher.

The broad-based S&P 500 climbed 4.69 (0.28 percent) to 1,694.16, while the tech-rich Nasdaq Composite Index increased 14.49 (0.39 percent) to 3,684.44.

The Dow Jones Industrial Average, whose 30 blue chip stocks do not include Apple, gained 31.33 (0.20 percent) at 15,451.01.

Shares in Apple skyrocketed to finish at $489.57 after activist Icahn took to Twitter to disclose his “large” stake in the company, which he rated “extremely undervalued.”

Icahn said he had pressed Apple chief executive Tim Cook to increase the company’s share buyback, a move that often boosts a company’s share price.

Icahn, whose stake is worth more than $1 billion, according to media reports, said the two had a “nice conversation.”

Shares were also buoyed after Federal Reserve Bank of Atlanta President Dennis Lockhart stressed that the Fed’s expected taper of its stimulus program would be cautious.

AMR Corp., the parent of American Airlines, plummeted 45.4 percent and US Airways lost 13.1 percent after the Department of Justice sued to block a merger between the two companies, arguing the deal would reduce competition and push up fares.

The news also sent other airline shares tumbling, including Delta Airlines, which lost 7.1 percent, and United Continental Holdings, down 7.5 percent.

Embattled retailer JC Penney dropped 3.7 percent after announcing that activist shareholder William Ackman had resigned and reaffirming that Myron Ullman would remain chief executive.

Steinway Musical Instruments lost 3.3 percent to $38.27 after Kohlberg & Co., which last month made a $35 a share takeover bid for the company, indicated it would not try to top Monday’s rival $38 bid from another firm, reported to be hedge fund Paulson & Co.

Drug maker Eli Lilly jumped 2.6 percent as the company said it had completed the phase-three study of a new treatment for lung cancer and would be sending the results to regulators by next year.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.71 percent from 2.61 percent late Monday, while the 30-year increased to 3.76 percent from 3.67 percent. Bond prices and yields move inversely.

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