On The Fly: Stocks end week mixed as banks kick off earnings season
Stocks ended the week mixed as earnings season kicked off with reports from some of the largest U.S. banks. The Dow slid a bit, but the Nasdaq had its second winning week ahead of the pick-up in tech earnings that will be starting shortly. MACRO NEWS: In the U.S., consumer credit surged to $24.5B in November. The NFIB gauge of small business optimism rose 7.4 points in December. The JOLTS report showed job openings rose 71,000 to 5.5M in November. Wholesale inventories bounced 1.0% in November, with sales up 0.4%. Initial jobless claims rose 10,000 to 247,000 in the week ended January 7. Import prices rose 0.4% in December, while export prices edged up 0.3%. The Producer Price Index rose 0.3% in December. Retail sales increased 0.6% overall in December. The University of Michigan consumer sentiment reading dipped to 98.1 in the preliminary January report. Business inventories rose 0.7% in November, with sales up 0.1%... In Europe, unemployment across the 19-country Eurozone held steady in November at 9.8%. Industrial production across the 19-country Eurozone spiked by 1.5% in November... In Asia, China's consumer price index rose 2.1% in December, while the producer price index rose 5.5% last month. China's exports decreased 6.1% on-year, while imports rose 3.1%. December's trade balance stood at $40.82B. COMPANY NEWS: Early in the week, Fiat Chrysler (FCAU) committed to invest $1B in a pair of U.S. factories and create 2,000 jobs in an effort to expand the Jeep brand. The President-elect thanked the company on Twitter after the news. Meanwhile, Fiat Chrysler CEO Sergio Marchionne said that the car maker may cease production in Mexico if Trump sets tariffs on vehicles made in Mexico and imported to the U.S. that are too high, according to a report by Reuters. Later in the week, the Environmental Protection Agency issued a notice to Fiat Chrysler for alleged violations of the Clean Air Act for installing and failing to disclose engine management software to disguise emissions from some of its diesel engines... Meanwhile, Volkswagen (VLKAY) agreed to plead guilty to three criminal felony counts and pay a $2.8B criminal penalty as a result of the company's "long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests [...] and lying and obstructing justice to further the scheme," the Justice Department announced. In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay an additional $1.5B... Alibaba's (BABA) executive chairman Jack Ma met with the President-elect to discuss the creation of one million new U.S. jobs over the next five years... Amazon (AMZN) said it plans to create an additional 100,000 full-time, full-benefit jobs in the U.S. over the next 18 months. At the same time, Wal-Mart (WMT) is readying another round of workforce reductions before the end of January, according to a report by the Wall Street Journal... In his first press conference as President-elect, Donald Trump said that the drug industry is "getting away with murder" in terms of pricing of drugs in the U.S., adding "We are going to start bidding, we are going to save billions of dollars." Following his comments, several large-cap pharmaceutical names moved downward, including Mallinckrodt (MNK), Mylan (MYL), Endo International (ENDP), Eli Lily (LLY), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Novartis (NVS), Pfizer (PFE), and Sanofi (SNY). Merck (MRK), however, outperformed its sector peers after the FDA granted priority review status to the company's Keytruda drug. A number of analysts expressed optimism about the company's outlook in notes to investors, as Morgan Stanley, Piper Jaffray and Guggenheim all upgraded the drug maker's shares to buy or equivalent ratings, citing the company's improved outlook following the FDA's decision... Apple (AAPL) plans to build a "significant" new business in original television shows and movies, according to a report by The Wall Street Journal... General Motors (GM) announced above consensus 2017 earnings per share guidance and the addition of $5B to its stock buyback authorization... Pandora Media (P) said it expects its fourth quarter revenue and adjusted EBITDA results to exceed its prior forecast and announced plans to cut its U.S. workforce by about 7%... GameStop (GME) announced that its holiday same-store sales plunged nearly 19% versus the same period a year earlier... In M&A news, ARIAD Pharmaceuticals (ARIA) agreed to be acquired by Takeda Pharmaceutical (TKPYY) for $24.00 in cash per share. Mars Incorporated announced a deal to buy VCA Inc. (WOOF) for $93 per share. Optum, part of UnitedHealth Group (UNH), announced the acquisition of Surgical Care Affiliates (SCAI) for $57 per share. McDonald's (MCD) agreed to sell the bulk of the company's China and Hong Kong business to CITIC and Carlyle Group (CG) for up to $2.1B. Valeant Pharmaceuticals (VRX) agreed to sell its CeraVe, AcneFree and AMBI skincare brands to L'Oreal (LRLCY) for $1.3B in cash and to divest Dendreon to Sanpower Group for about $820M. Derma Sciences (DSCI) announced it has signed a definitive agreement whereby it will be acquired by Integra LifeSciences (IART) for $7.00 per share of common stock in cash... Among companies that announced quarterly results this week, Global Payments (GPN), Barracuda Networks' (CUDA), Bank of America (BAC), JPMorgan (JPM), and Wells Fargo (WFC) advanced following their reports, while Acuity Brands (AYI), WD-40 (WDFC), SUPERVALU (SVU), Ethan Allen (ETH), Delta Air Lines (DAL), and Infosys (INFY) declined. INDEXES: For the week, the Dow fell 0.4% to 19,885.73, the Nasdaq gained 0.94% to 5,574.12, and the S&P 500 dipped 0.11% to 2,274.64.