Stocks end week at record highs as earnings season gets set to start
This week's stock market rally pushed the major averages to record highs ahead of Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC) kicking off the earnings season with their reports next Monday and Tuesday. Fed Chair Jerome Powell did his part to spark stocks by fueling hopes of an imminent rate cut with his testimony on Capitol Hill, but now the baton will be passed to companies reporting on their results to see if the advance can continue.
ECONOMIC EVENTS: In the U.S., the June Producer Prices Index report beat estimates with a 0.1% headline rise and a 0.3% core price gain. In energy news, Baker Hughes reported that the U.S. rig count is down 5 rigs from last week to 958.
TOP NEWS: Johnson & Johnson (JNJ) shares dropped over 4% after Bloomberg reported that the Department of Justice is pursuing a criminal investigation into whether the company lied to the public with its denials about the potential cancer risks linked to talcum powder. In a response given to Reuters, J&J said that the implication this is a new development in the talc matter is "flatly wrong."
President Donald Trump, who has already been a vocal critic of Facebook (FB), is now taking aim at the social media giant's digital currency plans. In a tweet last night, the president said he thinks the company's Libra virtual currency "will have little standing or dependability" and that if Facebook wants to "become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations." Helping to boost the stock late in the day, The Wall Street Journal reported that the FTC voted 3-2 this week to approve a roughly $5B settlement over the company's privacy mistakes. Facebook closed with a gain of about 2%.
Ford (F) and Volkswagen (VWAGY) confirmed they are expanding their global alliance to include electric vehicles and will collaborate with Argo AI to introduce autonomous vehicle technology in the U.S. and Europe. Volkswagen will invest $2.6B in Argo AI by committing $1B in funding and contributing its $1.6B Autonomous Intelligent Driving company, as well as purchasinig Argo AI shares from Ford for $500M over three years, via which the two companies will become equal shareholders in the joint venture.
Shares of Illumina (ILMN) fell 16% after the biotechnology company reported weak preliminary revenue for its second fiscal quarter and lowered its fiscal year revenue guidance as a result.
Meanwhile, Reuters reported that United Airlines (UAL) has extended its expectation that the grounded Boeing (BA) 737 MAX will stay off its flight schedule until November 3. United had previously left its fleet of the grounded aircraft off its flight schedule through early September, according to Reuters.
MAJOR MOVERS: Among the noteworthy gainers was Tower International (TOWR), which surged 70% after it agreed to be acquired by Autokiniton Global for $31 per share in cash. Also higher was Milacron (MCRN), which jumped 24% after agreeing to be acquired by Hillenbrand (HI) in a cash and stock deal valued at roughly $2B, including net debt. Shares of Hillenbrand were 13% lower after the news.
Among the notable losers was Anheuser-Busch InBev (BUD), which dropped 3% after the company announced that it is not proceeding with the announced public offering of a minority stake in its Asia Pacific subsidiary, Budweiser Brewing Company APAC Limited, on the Hong Kong Stock Exchange due to several factors, including the prevailing market conditions. Also lower was Emcore (EMKR), which fell 10% after cutting its second quarter guidance.
INDEXES: The Dow rose 243.95, or 0.90%, to 27,332.03, the Nasdaq gained 48.10, or 0.59%, to 8,244.14
, and the S&P 500 advanced 13.86, or 0.46%, to 3,013.77