The major averages spent most of the day little changed as investors weighed the latest batch of earnings reports against trade and Brexit related headlines. United Airlines (UAL) and Bank of America (BAC) issued better than expected reports, though a U.S. sign of support for protesters in Hong Kong was looked at as a potential landmine for the "phase one" trade deal struck with China last week. Next up on the earnings calendar will be Netflix (NFLX) and IBM (IBM), which will both be reporting after today's closing bell.
ECONOMIC EVENTS: In the U.S., the retail sales report undershot estimates with September declines of 0.3% for the headline and 0.1% for the ex-auto measure. Business inventories were unchanged in August, with sales up 0.2%. The NAHB housing market index jumped 3 points to 71 in October, which was better than expected. Meanwhile, the Federal Reserve said in its latest Beige Book that the U.S. economy has expanded at a "slight to modest pace" since the prior report as business activity varied across the country. The Fed added that employment rose slightly "on balance" in the period, with most Fed districts reporting a "modest" pace of price increases.
In trade news, China threatened "strong countermeasures" if the U.S. Congress follows through on legislation to back Hong Kong protesters.
TOP NEWS: Drug distributors were in focus after the Wall Street Journal reported yesterday that McKesson (MCK), AmerisourceBergen (ABC), and Cardinal Health (CAH) are in talks to pay $18B to settle sweeping litigation brought by state and local governments blaming the companies for fueling the opioid crisis. The Journal's Sara Randazzo said that the three distributors would collectively pay $18B over 18 years under the settlement deal currently on the table, noting that Johnson & Johnson (JNJ) is also involved in the talks to contribute additional money. Meanwhile, Bloomberg reported that, as part of the proposed settlement, Teva (TEVA) will offer $15B worth of free drugs, with J&J contributing about $4B to settle the litigation.
The UAW announced the achievement of a proposed tentative agreement with General Motors (GM) following "five weeks of intense negotiations" and a labor strike. The UAW GM National Council will meet and review details on October 17 in a private meeting, at which time they will vote on whether to recommend it to the full UAW-GM membership for ratification. Until the council reviews and votes to approve the proposed tentative agreement the strike will continue, the union noted. The car maker later confirmed confirmed the union's statement, saying additional details will be provided "at the appropriate time."
On the earnings front, United Airlines (UAL) shares rose over 2% after the air carrier reported better than expected adjusted earnings for the third quarter and raised its earnings guidance for fiscal 2019. Of note, the company said on its quarterly conference call that any impact from the return of Boeing's (BA) 737 MAX won't affect its profit guidance.
Continuing the week of bank earnings was Bank of America (BAC), whose shares gained 1.4% after it reported better than expected quarterly earnings.
In M&A news, MGM Resorts (MGM) agreed to sell the real estate assets of the Bellagio to Blackstone Real Estate Income Trust (BX) for $4.25B in a sale-leaseback transaction. In addition, MGM Resorts announced an agreement to sell Circus Circus Las Vegas for $825M to an affiliate of Treasure Island owner Phil Ruffin.
Meanwhile, Bloomberg reported that the FCC has voted to approve T-Mobile's (TMUS) proposed acquisition of Sprint (S), advancing a deal that still needs to win in a lawsuit from states that argue the combined entity would harm consumers.
MAJOR MOVERS: Among the noteworthy gainers was Achillion (ACHN), which surged 72% higher after it agreed to be acquired by Alexion Pharmaceuticals (ALXN) for $6.30 per share in cash. Alexion shares fell more than 5% after the news. Also higher was Stitch Fix (SFIX), which gained 4.6% after disclosing that director William Gurley bought 150,000 shares of common stock.
Among the notable losers was Workday (WDAY), which fell 11.3% after analysts at RBC Capital, Stifel and Deutsche Bank lowered their price targets on the shares following the company's Analyst Day. Also lower was Sleep Number (SNBR), which slid fractionally after reporting quarterly results.
INDEXES: The Dow fell 22.82, or 0.08%, to 27,001.98, the Nasdaq lost 24.52, or 0.30%, to 8,124.18, and the S&P 500 declined 5.99, or 0.20%, to 2,989.69.