On The Fly: Top stock stories for Monday
Stocks opened in positive territory thanks in part to the M&A activity over the weekend and the optimism of investors surrounding the earnings season. This week marks the busiest week for reporting and includes bellwethers from multiple industries, such as Apple (AAPL), General Motors (GM), and Merck (MRK). The averages found their levels shortly after the open and moved in a narrow range for the rest of the session as investors readied for the earnings blitz coming tonight and tomorrow morning. ECONOMIC NEWS: In the U.S., the Chicago Fed National Activity index rose to -0.14 in September. Markit's flash manufacturing PMI jumped 1.7 points to 53.2 in October, above the expected reading of 51.2. Consumer Reports, in its Annual Auto Reliability Survey, said Toyota (TM) and Lexus topped his list of the most reliable brands again. Chicago Federal Reserve Bank President Charles Evans suggested that the Fed may need to keep interest rates lower for longer to convince investors and the public that the central bank is serious about reaching its 2% inflation target. In Europe, the Markit's flash PMIs for the Eurozone were stronger than expected. The manufacturing PMI of 53.3 topped the 52.7 forecast, services at 53.5 beat the Street's 52.4 expectation, and the composite reading of 53.7 topped the forecast for a reading of 52.8. Japan's flash manufacturing PMI was solid as well, rising to 51.7 from 50.4 in September. COMPANY NEWS: Shares of AT&T (T) and Time Warner (TWX) dropped 1.7% and 3%, respectively, after the telecom and media giants entered into a definitive agreement under which the former will acquire the latter in a stock-and-cash transaction valued at nearly $109B, including Time Warner's net debt. The news sparked not only political criticism but also some downgrades of both stocks by Wall Street analysts, several of whom are bearish on the deal... The M&A news continued with Rockwell Collins (COL) agreeing to acquire B/E Aerospace (BEAV) for approximately $6.4B in cash and stock, plus the assumption of $1.9B in net debt... TD Ameritrade (AMTD) and Scottrade also announced that they have entered into a definitive agreement for the former to acquire the latter in a cash and stock transaction valued at $4B. The deal will happen in two parts. First, TD Bank Group (TD), which owns a large stake in TD Ameritrade, will purchase Scottrade and will also purchase $400M in new common equity from TD Ameritrade. Then, immediately following that acquisition, TD Ameritrade will acquire Scottrade in a cash and stock deal. MAJOR MOVERS: Among the notable gainers was T-Mobile (TMUS), which advanced 9.5% after the company reported better than expected third quarter earnings per share and raised its customer additions forecast. Also higher after earnings was ACCO Brands (ACCO), which gained 20% after the company reported better than expected third quarter earnings per share and announced that it has signed a definitive agreement to acquire Esselte Group Holdings AB, a leading European office products company, from private equity firm J.W. Childs for $333M in cash. Among the noteworthy losers was Inovio Pharmaceuticals (INO), which fell more than 16% after the FDA placed a clinical hold on its proposed phase III clinical program for VGX-3100. Also lower was Kimberly Clark (KMB), which slid 4.7% after the company reported third quarter earnings that missed consensus and cut its full-year guidance. Additionally, Davita (DVA) dropped 4.7% following a report that the company attempted to push low-income Medicaid patients into private insurance to collect richer payouts. INDEXES: The Dow rose 77.32, or 0.43%, to 18,223.03, the Nasdaq gained 52.43, or 1.0%, to 5,309.83, and the S&P 500 advanced 10.17, or 0.47%, to 2,151.33.