On The Fly: Stocks end week mixed as tech giants report, M&A heats up
The major averages ended the week mixed, with the Dow rising and bit and the Nasdaq declining, following mixed earnings from some of the biggest names in technology. It was a busy week in terms of M&A as well, headlined by the megadeal agreed to between AT&T (T) and Time Warner (TWX). Also making headlines to close out the week, the head of the FBI said the agency will review more emails related to Democratic presidential candidate Hillary Clinton's private email use. MACRO NEWS: In the U.S., GDP was estimated to have increased at a 2.9% annual rate in the third quarter, which was better than expected. Markit's flash manufacturing PMI jumped 1.7 points to 53.2 in October. 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. The FHFA home price index for August rose 0.7% to 237.9. The International trade in goods deficit narrowed to $56.1B in September. Markit's services PMI climbed to 54.8 in October. New home sales rebounded to a rate of 593,000 in October. Durable goods orders fell 0.1% in September. Weekly jobless claims decreased 3,000 to a seasonally adjusted 258,000 for the week ended October 22. The pending home sales index increased 1.5% to 110.0. The University of Michigan consumer sentiment reading fell 4.0 points to 87.2 in the final October print... In Europe, the U.K. posted stronger than expected GDP growth of 0.5% in the third quarter. Eurozone economic sentiment index strengthened to 106.3 for October... In Asia, Japan's flash manufacturing PMI rose to 51.7 in September. Japan's CPI fell 0.5% on year in September, while its unemployment rate dropped to 3% in September. COMPANY NEWS: AT&T and Time Warner made headlines most of the week after announcing they had 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. Qualcomm (QCOM) and NXP Semiconductors (NXPI) also announced a definitive agreement, under which Qualcomm will acquire NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47B. In other M&A news, Rockwell Collins (COL) agreed 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 announced they have entered into a definitive agreement for the former to acquire the latter in a cash and stock transaction valued at $4B. According to The Wall Street Journal, General Electric (GE) is looking to acquire Baker Hughes (BHI). In response, GE's VP of Investor Communications said that "GE has been in discussion with Baker Hughes on potential partnerships. While nothing is concluded, none of these options include an outright purchase"... On Wednesday, Apple (AAPL) reported better than expected quarterly earnings per share and revenue. However, the tech giant's worse than expected margin forecast for the holiday quarter sent the shares into negative territory and raised concerns about its ability to capitalize on high demand for its larger screen phones. The following day, Apple introduced its thinnest and lightest MacBook Pro ever during its "Hello Again" event. The new laptop comes with a Touch Bar, a multi-touch strip replacing the top row of the keyboard that includes application-specific keys and tool, and has a Touch ID fingerprint sensor built into the power button... Twitter (TWTR) announced better than expected quarterly results and said it will cut 9% of its global workforce as part of a restructuring plan. The microblog service operator also said that it will be discontinuing Vine, the short-form video app it once hoped would complement its text-based network... Tesla (TSLA) posted a surprise profit in the third quarter, cut its capital spending budget and said it does not expect to need new capital to get its "mass market" Model 3 sedan rolled out... On Thursday, internet giants Amazon (AMZN) and Alphabet (GOOG; GOOGL) reported quarterly results, with the first announcing a surprising third quarter earnings miss and the latter beating estimates as users spend more time on smartphones and advertisers spend more dollars to reach them there... Among other companies that announced quarterly results this week, T-Mobile (TMUS), Procter & Gamble (PG), Merck (MRK), Boeing (BA), Akamai Technologies (AKAM), Six Flags (SIX), Western Digital (WDC), Bristol-Myers Squibb (BMY), Chevron (CVX), Gigamon (GIMO), Hershey (HSY), and MasterCard (MA) advanced following their reports. Meanwhile, Kimberly Clark (KMB), Under Armour (UA), General Motors (GM), Visa (V), DuPont (DD), Caterpillar (CAT), 3M (MMM), Sonic (SONC), Sprint (S), Comcast (CMCSA; CMCSK), Coca-Cola (KO), Chipotle Mexican Grill (CMG), Pandora Media (P), Groupon (GRPN), Exxon Mobil (XOM), Synaptics (SYNA), and McKesson (MCK) declined. INDEXES: For the week, the Dow rose 0.09% to 18,161.19, the Nasdaq lost 1.28% to 5,190.10, and the S&P 500 declined 0.68% to 2,126.41.