Dow surges on report; trading to close early

Inspired by a bigger-than-expected rise in factory orders, investors sent stocks higher Wednesday, taking advantage of lower prices after last week’s declines and extending the market’s advance. The Dow Jones industrials rose 101 points.

Surprisingly strong sales at Starbucks, brokerage house upgrades and a legal victory for Merrill Lynch contributed to the gains.

“The market continues to look forward to better economic news in the second half of the year,” said Lynn Reaser, chief economist and senior market strategist for Banc of America Capital Management.

Volume was light due to many traders being absent ahead of the July Fourth holiday. Trading will end at 1 p.m. today, and the market will be closed Friday.

Accounting

Ernst & Young settles to end IRS investigation

One of the nation’s largest accounting firms, Ernst & Young LLP, has agreed to pay $15 million and let tax agents examine its books as part of a settlement that ends an Internal Revenue Service investigation into tax shelters marketed and sold to wealthy clients.

Ernst & Young spokesman Kenneth Kerrigan said the accounting firm admitted no wrongdoing.

The IRS touted Wednesday’s accord as a model for future settlements. The agency has opened more than 90 investigations into tax shelter issues.

Ernst & Young became the poster child for the issue once it was revealed that the firm set up questionable tax shelters that led to the departure of the top two executives at its audit client, Overland Park-based Sprint Corp.

Finances

Food maker to seek bankruptcy protection

Aurora Foods, maker of Aunt Jemima pancakes, Duncan Hines baking mixes and other foods, plans to restructure through a pre-negotiated bankruptcy that gives a buyout firm a majority stake in the reorganized company, officials said Wednesday.

J.W. Childs Associates of Boston would invest $200 million in exchange for a 65.6 percent equity interest in Aurora. Debt-holders would get about 29.5 percent of the reorganized company’s common stock. Existing common and preferred stockholders would get a 4.9 percent stake. Holders of senior unsecured notes would receive about $29 million in new unsecured notes.

The pre-negotiated reorganization plan will eventually be filed through Chapter 11 bankruptcy proceedings, Aurora spokesman Alan Oshiki said.

Manufacturing

St. Joseph company completes reorganization

The Wire Rope Corp. of America has emerged from bankruptcy leaner, more efficient and with a bright future, company officials said.

The St. Joseph, Mo., company emerged from a 13-month bankruptcy odyssey Tuesday, after being purchased by KPS Special Situations Fund for $53 million in assumed debt and $1.5 million in cash.

Wire Rope makes products used in the construction, energy, mining and steel industries.