The Market at 02:00PM ET
Dow: +75.16… | Nasdaq: +47.01… | S&P: +8.56…
NASDAQ Vol: 875.4 mln… Adv: 1667… Dec: 1101…
NYSE Vol: 385.9 mln… Adv: 1657… Dec: 1224…
Moving the Market
Wave of M&A activity, highlighted by AT&T (T) acquiring Time Warner (TWX) for ~$85 billion or $107.50 per share
European markets outperform amid mostly better-than-expected PMI data
Quarterly reports continue to pour in
Heavily-weighted technology and financials outperform
Strong: Technology, Financials, Consumer Discretionary, Consumer Staples
Weak: Energy, Telecom Services, Health Care
[BRIEFING.COM] The broader market has traded in sideways fashion as the S&P 500 remains up 0.4%.
The leaderboard remains little changed with energy (-0.8%) and telecom services (-0.7%) leading to the downside. On the other hand, influential technology (+1.0%) and consumer staples (+0.7%) outperform.
The heavily-weighted health care sector (+0.1%) has pulled back throughout the session, narrowing its initial 0.5% gain. Pharmaceutical name Bristol-Myers (BMY 49.25, -0.77) weighs on the group ahead of this Thursday's quarterly report. The stock has declined 8.9% so far in October, which compares to a loss of 3.3% in the broader sector. The health care sector only leads countercyclical telecom services (month-to-date: -7.6%) on the monthly leaderboard.
Biotechnology trades on a flat note as Mylan (MYL 37.81, +0.79) outperforms inside the sub-group. The stock has narrowed its October loss to 0.8%.
Gold ended its pit session lower by 0.3% ($1,263.50/ozt; -$4.20). The precious metal has declined 4.1% this month, alongside a 3.6% appreciation in the U.S. Dollar Index (98.80, +0.10, +0.10%).
[BRIEFING.COM] Not much change in the market with the S&P 500 remaining up 0.4% amid gains in most sectors.
The heavily-weighted financial space (+0.4%) was among the early outperformers, but the group has backed away from its best level of the day. This has taken place even though Treasuries remain near their lows, leading to steepening in the yield curve. Selling in the 10-yr note has its yield up three basis points at 1.76% while the 2-yr note sits just below its flat line with its yield at 0.83%.
Today's in-line performance in the financial sector has helped the economically-sensitive group extend its October gain to 2.0% while the second-best performing sector-technology-is up 1.0% for the month. The top-weighted group will be in focus this week with Apple (AAPL 117.34, +0.74) and Alphabet (GOOGL 836.17, +12.11) scheduled to report their quarterly results.
[BRIEFING.COM] The stock market trades on a higher note at midday as a string of M&A developments stokes risk appetite. Quarterly results also remain in focus as participants attempt to assess the earnings outlook for the remainder of the year. At midday, the Nasdaq Composite (+0.8%) trades ahead of both the Dow Jones Industrial Average (+0.4%) and the S&P 500 (+0.4%).
Equity indices gapped up at the start of the day as an upbeat overseas session and an influx of M&A news bolstered the major averages.
AT&T (T 36.87, -0.62, -1.7%) made headlines over the weekend when it announced that it would acquire Time Warner (TWX 87.37, -2.11, -2.4%) for $85.4 billion, or $107.50 per share. Reports of a potential deal crossed the wires late last week, leading Time Warner to a weekly gain of 12.5%. Meanwhile, Rockwell Collins (COL 79.08, -5.38, -6.4%) announced that it would acquire BE Aerospace (BEAV 58.61, +8.00, +15.8%) for $62.00 per shares, amounting to $8.3 billion in total consideration.
The major averages pulled back after the opening half hour, but continue to hold more than half of their gains.
Treasuries trade on a lower note with the long end of the curve underperforming. The yield on the 2-yr note has risen one basis point to 0.84% while the yield on the benchmark 10-yr note is higher by three basis points at 1.76%. The move lower in bonds took place after U.S. Manufacturing PMI for October came in better than expected.
Higher-yielding sectors -- telecom services (-0.6%), utilities (UNCH), and real estate (UNCH) -- have pulled back in response to the uptick in rates while commodity-sensitive energy (-1.1%) slips alongside crude oil.
Seven S&P 500 sectors trade in positive territory with technology (+0.9%), consumer staples (+0.6%), and consumer discretionary (+0.5%) leading the pack.
In the influential technology sector (+0.9%), Dow component Microsoft (MSFT 60.53, +0.87) outperforms as its extends its post-earnings winning streak. The stock has gained 5.7% since beating top- and bottom-line estimates for the quarter last Thursday. Chipmakers also outperform in the group as Qorvo (QRVO 56.99, +2.29) jumps 4.2%. CNBC's Jim Cramer signaled that the company could be a takeover candidate earlier in the session.
Media names trade behind the broader consumer discretionary sector (+0.6%) as the group moves lower in sympathy with Time Warner (TWX 87.37, -2.11). Participants are expressing some misgivings about the potential regulatory hurdles that the company will need to clear in order to be acquired by AT&T. On the flipside, Amazon (AMZN 832.85, +13.86) trades higher by 1.7% after Goldman Sachs raised its price target on the stock to $1050 from $920.
In the industrial sector (+0.5%), Dow component Boeing (BA 137.69, +2.06) leads the price-weighted average as it drafts higher beside aircraft parts name BE Aerospace (BEAV 58.61, +8.00).
WTI crude ($49.88/bbl; -$0.97, -1.9%) is under pressure following reports that Iraq would like an exemption from OPEC's production cut agreement. Recall that the oil collective announced last month that it agreed to lower its production to 32.5 million barrels per day. However, selling remains somewhat limited after Iran indicated that it would encourage other members to join the output freeze.
There was no economic data of note released today.
[BRIEFING.COM] The broader market is little changed since our last update.
Nine sectors trade in the green with technology (+1.0%), consumer discretionary (+0.6%), and consumer staples (+0.6%) leading the pack. Conversely, energy (-0.7%) and telecom services (-0.5%) round out the board.
The economically-sensitive financial sector (+0.6%) demonstrates relative strength as upbeat economic data and some steepening in the yield curve boost the group. The yield spread between the 2-yr note (0.83%) and the 10-yr note (1.77%) has expanded to 94 basis points from 83 basis points at the end of September. Banking names demonstrate relative strength in the group as the S&P Bank ETF (KBE 34.68, +0.27) advances 0.8%. Meanwhile, Wells Fargo (WFC 45.52, +0.43) trades higher by 1.0%, extending its October gain to 2.8%. This follows a 12.8% loss in September.
On the commodities front, WTI crude trades down 1.9% ($49.85/bbl; -$1.00) while gold has ticked lower by 0.4% to $1,262.90/ozt. The move lower in commodities occurred alongside some strengthening in the U.S. Dollar Index (98.75, +0.05, +0.05%).
[BRIEFING.COM] The S&P 500 (+0.4%) has inched lower in recent trade, floating roughly five points below its session high.
The higher-yielding sectors -- telecom services (-0.5%), utilities (-0.1%), and real estate (UNCH) -- have continued to pull back amid rising Treasury yields. The yield on the benchmark 10-yr note has risen three basis points to 1.77%. The yield on the 10-yr note is up 17 basis points from September's settlement at 1.60%.
In the consumer discretionary space (+0.7%), media names trade on a mixed note as CBS (CBS 56.42, -1.24) and Viacom (VIAB 37.14, -0.37) fall in sympathy with Time Warner (TWX 87.53, -1.95). AT&T (T 36.78, -0.70) agreed to acquire Time Warner over the weekend for $107.50 per share. However, participants are expressing some misgivings about the potential regulatory hurdles the two will need to clear.
Retail giant Amazon (AMZN 834.25, +15.26) trades higher by 1.9% after Goldman Sachs raised its price target on the stock to $1050 from $920. The company is slated to release its quarterly report Thursday after the close.
[BRIEFING.COM] The Nasdaq Composite (+0.9%) notched a fresh session high in recent action, remaining ahead of both the S&P 500 (+0.5%) and the Dow Jones Industrial Average (+0.5%).
The Dow Jones Transportation Average (+0.9%) trades ahead of the broader market as rail names rebound from recent selling pressure. Union Pacific (UNP 91.22, +0.85) pressured the group last Thursday after reporting a bottom-line miss. The stock declined 6.7% last week, but is up 0.9% today. Separately, UPS (UPS 108.45, +1.29) has gained 1.2% ahead of Thursday morning's quarterly report.
Dow component Boeing (BA 138.62, +2.99) remains at the top of the price-weighted average as it drafts higher with supplier of aircraft parts BE Aerospace (BEAV 58.40, +7.79).
WTI crude trades lower by 1.1% ($50.27/bbl; -$0.58). The energy component has been under pressure following reports that Iraq would like an exemption from OPEC's production cut agreement. The selling remains limited after Iran indicated that it would encourage other members to join the output freeze. Recall that the oil collective announced last month that it agreed to lower its production to 32.5 million barrels per day.
[BRIEFING.COM] The S&P 500 (+0.5%) has pulled back in recent action, trading approximately three points below its best level of the day.
The heavily-weighted technology (+0.9%), industrial (+0.5%), and financial (+0.5%) sectors remain at the top of the leaderboard while telecom services (-0.6%) and energy (-0.2%) sport the only losses.
The influential technology sector (+0.9%) continues to support the broader market as Dow component Microsoft (MSFT 60.48, +0.82) hovers near a recently-established all-time high (60.57). Heavily-weighted Alphabet (GOOG 809.25, +9.88) also outperforms as participants look ahead to Thursday's quarterly report.
The high-beta chipmakers demonstrate relative strength, evidenced by the 1.3% gain in the PHLX Semiconductor Index. In the index, Qorvo (QRVO 57.36, +2.66) has rallied 4.9% after JP Morgan issued an "Overweight" rating on the stock. CNBC's Jim Cramer also indicated that the company could be a takeover candidate.
The Treasury complex trades on a lower note with the long end of the curve underperforming. The yield on the 2-yr note has risen two basis points (0.84%) while the yield on the benchmark 10-yr note is higher by three basis points (1.76%). Bonds lost ground after U.S. Manufacturing PMI for October beat consensus estimates.
[BRIEFING.COM] The broader market floats near its session high as the S&P 500 advances 0.6%.
All 11 sectors trade above their flat lines as technology (+1.0%), industrials (+0.8%), and financials (+0.7%) lead the pack. On the other hand, health care (+0.2%), energy (+0.2%), and telecom services (UNCH) round out the leaderboard.
Biotechnology demonstrates relative weakness in the health care sector (+0.2%), evidenced by the 0.3% loss in the iShares Nasdaq Biotechnology ETF (IBB 266.85, -0.92). In the ETF, Vertex Pharmaceuticals (VRTX 78.52, -2.24) weighs after being downgraded to "Neutral" from "Buy" at H.C. Wainwright. The firm cited increased competition in CF therapeutics.
The Treasury complex has pulled back in recent action as yields rise across the curve. The yield on the 2-yr note has gained one basis point (0.84%) while the yield on the benchmark 10-yr note is also higher by one basis point (1.75%).
[BRIEFING.COM] The stock market began the day on a higher note with the Nasdaq Composite (+0.6%) and the Dow Jones Industrial Average (+0.6%) trading slightly ahead of the S&P 500 (+0.5%).
Ten sectors trade in positive territory with technology (+0.7%), industrials (+0.7%), and real estate (+0.7%) trading neck-and-neck in front of the pack. The remaining gainers sport upticks between 0.1% (energy) and 0.6% (financials). Conversely, the telecom services sector has declined by 0.7%.
In the industrial sector (+0.7%), 3M (MMM 172.98, +3.48) has gained 2.1% after being upgraded to "Overweight" from "Equal Weight" at Barclays. Meanwhile, Dow component Boeing (BA 138.22, +2.59) has drafted higher by 1.9% after Rockwell Collins (COL 81.17, -3.29) agreed to acquire BE Aerospace (BEAV 58.67, +8.06) for $62 per share.
The technology space (+0.8%) trades ahead of the broader market as Dow component Microsoft (MSFT 60.23, +0.57) extends its recent winning streak. The name reported better-than-expected quarterly results last Thursday.
On the commodities front, WTI crude trades lower by 1.2% ($50.24/bbl; -$0.61) while gold has ticked higher by 0.4% to $1,272.30/ozt.
The stock market is on track for a higher start as the S&P 500 futures trade ten points above fair value.
An upswing in recent M&A activity continues to provide support to equity futures as participants weigh a handful of recently-announced deals. AT&T's (T 36.55, -0.94, -2.5%) agreement to acquire Time Warner (TWX 88.24, -1.24, -1.4%) remains the story of the morning as investors eye a healthy premium and the potential for more consolidation in the media space. The telecom giant has agreed to acquire Time Warner for $107.50 per share, representing more than a 20.0% premium from Friday's closing price.
The earnings reporting season also remains in high gear. Kimberly-Clark (KMB 115.62, -3.96) trades lower by 3.3% after missing top- and bottom-line estimates for the quarter and narrowing its full-year earnings guidance. Meanwhile, Rockwell Collins (COL 81.42, -3.04) has slipped 3.6% in pre-market after reporting a mixed quarter and announcing the acquisition of BE Aerospace (BEAV 58.78, +8.17, +16.1%). Rockwell agreed to acquire BE Aerospace for approximately $62 per share in cash and stock.
The U.S. Dollar Index (98.63, -0.07, -0.07%) will also remain in focus as a 3.4% appreciation so far in October continues to create some angst regarding earnings prospects of multinational companies. The greenback has been on the rise amid increasing expectations for a rate hike. On that note, a number of Federal Reserve officials will speak today.
There is no economic data of note scheduled to be released today.
The S&P 500 futures trade ten points above fair value.
Equity indices in the Asia-Pacific region ended Monday on a mixed note. Chinese stocks displayed relative strength while the yuan continued its recent retreat against the dollar. Elsewhere, the Nikkei (+0.3%) edged up modestly after the release of better than expected trade data. The Bank of Japan released its semiannual Financial Stability report, which noted that an increasing number of banks are having difficulty covering expenses with revenue from lending as negative interest rate policy takes its toll.
Major European indices trade mostly higher with Spain's IBEX (+1.6%) showing relative strength. The country's Socialist party has elected to stand aside and allow Prime Minister Mariano Rajoy to form a minority government. The move was aimed at avoiding the third general election in a year. Other European markets have responded positively to above-consensus PMI data.
Equity futures are little changed as the S&P 500 futures remain nine points above fair value.
The U.S. Dollar Index (98.60, -0.10, -0.10%) floats lower as the euro and the pound retrace some gains against the buck. The euro/dollar pair trades higher by 0.1% (1.0895) after moving off the 1.0900 price level. The currency is on the rise amid some better-than-expected PMI data out of the eurozone. Separately, the pound has gained 0.1% against the buck (1.2240), attempting to recover from recent selling pressure.
Crude oil has been unable to take advantage of the softening in the greenback. The energy component currently trades lower by 1.3% ($50.19/bbl; -$0.66). The move lower has corresponded with reports that Iraq may attempt to find an exemption from OPEC's recently-minted supply freeze agreement. However, losses have been kept in check by some positive chatter out of Iran. Iran indicated that it would encourage other members to join the output freeze.
U.S. equity futures trade on a higher note with the S&P 500 futures floating nine points above fair value. Index futures are on the rise this morning amid a positive bias in global markets and an upsurge in M&A activity. European bourses tilt to the upside as some better-than-expected PMI data boosts regional equities and the euro. The U.S. Dollar Index (98.63, -0.07, -0.07%) is slightly weaker following its recent winning streak.
On the home front, AT&T (T 36.55, -0.94, -2.5%) agreed to acquire Time Warner (TWX 88.70, -0.78, -0.9%) over the weekend for approximately $85 billion or $107.50 per share. The deal is expected to close before the end of 2017. Rockwell Collins (COL 82.46, -2.00, -2.4%) also announced that it agreed to acquire BE Aerospace (BEAV 59.31, +8.70, +17.2%) for $62.00 per shares, amounting to $8.3 billion in total consideration. Separately, TD Ameritrade (AMTD 37.48, +0.40, +1.1%) is in the news this morning, following the company's announcement that it will acquire Scottrade in a cash and stock transaction. That deal is valued at roughly $4 billion.
Treasuries trade on a higher note with yields slipping throughout the complex. The yield on the benchmark 10-yr note is down one basis point to 1.73%.
There is no economic data of note scheduled to be released today.
In U.S. corporate news of note:
Reviewing overnight developments:
[BRIEFING.COM] The stock market ended an upbeat week on a flat note as the S&P 500 (UNCH) retraced most of an 11-point opening drop to finish little changed. The rebound effort featured its fair share of M&A chatter and leadership from the heavyweight consumer discretionary (+0.8%) and technology (+0.6%) sectors. The Nasdaq Composite (+0.3%) settled ahead of both the benchmark index and the Dow Jones Industrial Average (-0.1%). For the week the three indices gained between 0.04% and 0.83%.
The major averages began the day under pressure as strengthening in the dollar and the latest batch of quarterly earnings contributed to opening hour weakness.
The U.S. Dollar Index (98.64, +0.33, +0.33%) extended its winning streak last evening as the pound and the euro each lost ground to the greenback. The buck continued to receive support from an improved U.S. rate hike picture and recent safe-haven flows. Furthermore, the move lower in European currencies came ahead of this weekend's EU Economic Summit, which may provide some Brexit-related headline volatility. The euro and the pound finished down a respective 0.4% (1.0882) and 0.2% (1.2226) against the dollar.
A stronger dollar served as a headwind for dollar-denominated commodities and the earnings prospects of multinational companies. This was on display when General Electric (GE 28.98, -0.09) beat bottom-line estimates for the quarter, but narrowed its guidance range. Meanwhile, Honeywell (HON 108.96, +0.82) gained 0.8% after reporting bottom-line results that fell in-line with the company's earnings warning.
The broader market reversed course after the first hour as a fresh dose of M&A chatter helped boost investor sentiment. The Wall Street Journal reported that AT&T (T 37.49, -1.16) is in advanced talks to acquire Time Warner (TWX 89.48, +6.49). The headline came on the heels of a similar report from Bloomberg in the prior session. Separate rumors indicated that Softbank (SFTBY 31.68, -0.29) could be interested in acquiring Twitter (TWTR 18.09, +1.19). The social media name finished higher by 7.0%.
The benchmark index settled in the top of today's trading range, but was unable to reclaim its flat line. Seven sectors ended in the red with telecom services (-2.3%), health care (-0.9%), and energy (-0.7%) rounding out the leaderboard. On the flipside, consumer discretionary (+0.8%), technology (+0.6%), consumer staples (+0.5%), and financials (UNCH) led the pack.
In the health care space (-0.9%), biotechnology narrowed its weekly gain as Biogen (BIIB 290.65, -9.01) fell 3.0%. The stock was under pressure amid rumors suggesting the company might acquire ACADIA Pharmaceuticals (ACAD 25.34, +1.39). Mylan (MYL 37.02, -0.59) declined by 1.6% after Senator Elizabeth Warren called Mylan's EpiPen settlement with the Department of Justice "shamefully weak."
The commodity-sensitive energy sector (-0.7%) settled at the bottom of the board as oilfield service names weighed. Schlumberger (SLB 80.47, -2.52) declined 3.0% after reporting a mixed quarter last evening. However, it is worth noting that crude oil finished the day in positive territory. WTI crude settled higher by 0.4% ($50.85/bbl, +$0.20).
In the consumer discretionary sector (+0.8%), media names demonstrated relative strength after speculation that Time Warner (TWX 89.48, +6.49) was a takeover target arose. Vicaom (VIAB 37.51,+1.01) and CBS (CBS 57.66, +1.17) finished higher by 2.8% and 2.1%, respectively. Separately, Dow component McDonald's (MCD 113.93, +3.36) finished ahead of the price-weighted average after beating quarterly estimates.
The heavily-weighted technology sector (+0.6%) outperformed as Dow component Microsoft (MSFT 59.69, +2.44) carved out a new all-time high (60.45). The stock rallied 4.3% after beating analysts' estimates for the quarter. Elsewhere, Qualcomm (QCOM 67.93, +0.59) rose 0.9% after CNBC reported that the company is close to acquiring NXP Semiconductor (NXPI 101.71, -2.78) for $110 per share.
Treasuries finished on a higher note as the long end of the curve outperformed. The yield on the 2-yr note settled flat at 0.83% while the yield on the benchmark 10-yr note finished down two basis points at 1.73%.
Today's trading volume was above the average of 853 million as 863 million shares changed hands at the NYSE floor.
There was no economic data of note released today and Monday's economic calendar is similarly vacant.
Week in Review: Quiet Week Ends on Flat Note
The stock market meandered through a lazy week with the S&P 500 adding 0.4% after spending the week in a 24-point range. The benchmark index was outpaced by the Nasdaq Composite (+0.8%) while the Dow Jones Industrial Average (UNCH) settled little changed.
The week started on a quiet note as participants awaited a slew of earnings and Thursday's policy decision from the European Central Bank. However, range bound action continued through Friday.
The European Central Bank made no changes to its interest rate corridor and President Mario Draghi made sure to avoid any specific references to either tapering or extending the purchase program before March 2017. The euro climbed immediately after the policy announcement, but retreated during Mr. Draghi's press conference. The single currency continued declining on Friday, ending the week near 1.0875 against the dollar, near levels from early March.
To be fair, the decline in the euro was facilitated by all-around dollar strength as the greenback benefited from economic data and comments from FOMC Vice Chair William Dudley, who said a rate hike before the end of 2016 makes sense to him. The implied probability of rate hike in December stands at 69.9%, according to the fed funds futures market. For its part, the Dollar Index registered its third consecutive weekly gain, climbing 0.7% to levels not seen since late January.
The strength in the dollar prevented crude oil from making big strides. The energy component settled at $50.85/bbl, just above its closing level from last week.
Market participants received another batch of quarterly results with the reporting season set to hit full stride next week. Investors did receive above-consensus results from a large share of Dow components like American Express (AXP), General Electric (GE), Goldman Sachs (GS), IBM (IBM), Johnson & Johnson (JNJ), Microsoft (MSFT), McDonald's (MCD), UnitedHealth (UNH), and Verizon (VZ). Interestingly, the batch of beats did not spark a buying frenzy. On the whole, tech earnings were received with the warmest reception, evidenced by the outperformance in the Nasdaq Composite.