Stocks end higher as U.S., China reportedly move closer to "phase one" deal
Stocks gained back today much of what they'd lost in yesterday's selloff after Bloomberg reported that the U.S. and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a "phase one" trade deal. People familiar with the talks said that President Donald Trump's comments yesterday downplaying the urgency of a deal shouldn't be understood to mean the talks were stalling, the report added. The move down yesterday, and bounceback today, underscore how much the major averages remain levered to trade headlines.
ECONOMIC EVENTS: In the U.S., ADP reported private payrolls rose by only 67,000 jobs in November, missing the consensus forecast of 135,000. Markit's final November services PMI rose 1 point from the prior month to 51.6 , matching the preliminary print. The ISM services index fell 0.8 to 53.9 in November, which was another disappointment after a roughly 2 point rise in October.
TOP NEWS: Alphabet (GOOGL) CEO Larry Page announced last night in a company blog post that Google CEO Sundar Pichai will be the chief executive of both Google and Alphabet going forward. "With Alphabet now well-established, and Google and the Other Bets operating effectively as independent companies, it's the natural time to simplify our management structure. We've never been ones to hold on to management roles when we think there's a better way to run the company. And Alphabet and Google no longer need two CEOs and a President," Page wrote in his letter announcing the changes.
While Alphabet was showing its trust in its current leadership, Expedia (EXPE) did the opposite in announcing that CEO Mark Okerstrom and CFO Alan Pickerill were leaving the company due to the fact that "senior management and the board disagreed on strategy." Chairman Barry Diller, who will have a hand in managing day-to-day operations while the board determines the long-term leadership of the company, said the board disagreed with the departing leadership's "lackluster near-term outlook" and that he "strongly" believes the company can accelerate growth in 2020. Analysts were mixed on the potential impact of the management shake-up, but investors bid up the stock by 6.2% following the news.
Workday (WDAY) shares fell 4.7% after the company reported fiscal Q3 results that several analysts called "solid" but gave worse than expected guidance for the next fiscal year.
Meanwhile, Jefferies analyst Brent Thill said fellow enterprise cloud services provider Salesforce (CRM) posted "strong" fiscal Q3 results across the board, setting the stage for a strong finish to fiscal 2020. However, Barclays analyst Raimo Lenschow said he believes Salesforce shares will remain range-bound post last night's fiscal report. As of the close, Salesforce shares had fallen 3.3%.
In M&A news, Instructure (INST) announced that it has agreed to be acquired by private equity investment firm Thoma Bravo in an all-cash transaction that values the company at approximately $2B, or $47.60 per share.
MAJOR MOVERS: Among the noteworthy gainers was Allakos (ALLK), which surged 43.6% after Bloomberg reported that the company is weighing options, including a potential sale. Also higher was PG&E (PCG), which gained 11.1% after Bloomberg reported that the company is near finalizing terms for a $13.5B payout to victims of wildfires caused by its power lines.
Among the notable losers was G-III Apparel (GIII), which slid 2.2% after it reported quarterly results and lowered its guidance for fiscal 2020. Also lower was Peloton (PTON), which fell an additional 1.5% after the company issued a statement to CNBC on its scrutinized television commercial and The Verge reported that the price of its digital subscription has been lowered to $12.99 per month.
INDEXES: The Dow rose 146.97, or 0.53%, to 27,649.78, the Nasdaq gained 46.03, or 0.54%, to 8,566.67, and the S&P 500 advanced 19.56, or 0.63%, to 3,112.76.
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