News that Ameritrade Holding Corp. had reached a deal to buy Toronto-Dominion Bank's U.S. brokerage business captured investors' attention Wednesday.
Trading was anemic elsewhere. "It was a very hectic day, though volumes wouldn't show that," said Peter McCorry, a senior trader with Keefe, Bruyette & Woods Inc.
Shares of Ameritrade, a retail brokerage based in Omaha, ended the day up 20.6%. The price of its deal for TD Waterhouse USA was not disclosed, but analysts put it at about $3 billion.
Ameritrade investors are to receive a special cash dividend of $6 a share. The deal is expected to close in about six months, and the combined company would be named TD Ameritrade.
Toronto-Dominion, which in March bought a 51% stake in Banknorth Group Inc. and renamed it TD Banknorth Inc., would get a 32% stake in Ameritrade.
The announcement of the Ameritrade deal for TD Waterhouse followed weeks of rumors and Ameritrade's rejection of a buyout offer from E-Trade Financial Corp.
E-Trade's shares rose 6.1% Wednesday. Shares of the other big name in retail brokerage, Charles Schwab Corp., rose 1.3%.
Gains in online brokerage stocks helped the American Stock Exchange's brokerage index rise 3%. Toronto-Dominion rose 1.2% and TD Banknorth rose 0.9%.
Three Puerto Rican banking companies were among Wednesday's top gainers, led by Oriental Financial Group Inc.'s 6.1% increase. Santander rose 3.8% and Doral Financial 3.6%. Mr. McCorry attributed the increases to short-sellers' covering their positions.
The American Banker index of 225 banks rose 0.9% and the Standard & Poor's 500 was virtually unchanged.
Some mortgage lenders had a rough day. The Mortgage Bankers Association said that its index of mortgage loan applications slid 11.3% for the week that ended June 17 from the previous week, though it was up 29.6% compared with a year earlier.
New Century Financial Corp of Irvine, Calif., fell 2.9%, Fannie Mae fell 1.3%, and Freddie Mac fell 1.1%.
