US stocks gain as Dow Chemical, DuPont surge on merger talks

DuPont and Dow Chemical shares surged in early trade Wednesday on news of talks on a possible mega-merger, lifting the Dow and the S&P 500.

About 30 minutes into trade, the Dow Jones Industrial Average was at 17,637.95, up 69.95 points (0.40 percent).

The broad-based S&P 500 added 3.28 (0.16 percent) at 2,066.87, while the tech-rich Nasdaq Composite Index dropped 14.28 (0.28 percent) to 5,083.97.

DuPont jumped 11.8 percent and Dow Chemical 10.8 percent on prospects of their combining into the world's biggest chemical company, with annual sales totalling more than $90 billion.

The merger would create a company with three separate divisions: agriculture, speciality products, and materials and material sciences, according to sources.

Yahoo rose 0.7 percent after announcing a retreat from plans to hive off its Alibaba stake and instead seek a "reverse spinoff" of its core Internet properties.

Petroleum stocks gained as oil prices rebounded slightly. Dow member Chevron gained 2.6 percent, ConocoPhillips 1.6 percent and Anadarko Petroleum 1.7 percent.

Big-box retailer Costco Wholesale tumbled 5.5 percent after net income for the quarter ending November 22 fell 3.2 percent to $480 million due to a one percent fall in comparable sales.

Yoga-gear retailer Lululemon Athletica dropped 7.5 percent after forecasting fourth-quarter net income of 75-78 cents per share, below the 86 cents projected by analysts.

Metals and oil producer Freeport-McMoRan jumped 10.5 percent as it announced further cuts to its capital budget and suspended its annual dividend in light of weak commodity prices.

Gaming giant Wynn Resorts surged 11.8 percent on news that chief executive Stephen Wynn bought one million shares on the open market, lifting his stake to about 11 percent.