Stocks add to rally as U.S. housing starts rise in November
Stocks added to their recent rally after U.S. data, including reports on housing starts and industrial production, beat estimates. Boeing (BA) confirmed what many expected to be coming, namely that it will temporarily pause making new 737 MAX jets as regulators take longer than the planemaker forecast to return the grounded jet to service but the shares managed to finish the day nearly flat despite the news.
ECONOMIC EVENTS: In the U.S., November housing starts rose 3.2% to a 1.365M home pace, which was much stronger than forecast. Industrial production rebounded 1.1% in November, which was more than double the estimate, while capacity utilization rose to 77.3% from 76.6% previously. The JOLTS report showed job openings rose 235,000 to 7.27M positions in October.
In White House news, Bloomberg reported that President Donald Trump plans to attend the Davos economic forum, according to administration officials. The event has been speculated as a possible venue for Trump and Chinese President Xi to meet and sign the "phase one" trade deal that has been struck between U.S. and Chinese negotiators.
TOP NEWS: Boeing confirmed last night that it will prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month, driven by "a number of factors, including the extension of certification into 2020, the uncertainty about the timing and conditions of return to service and global training approvals, and the importance of ensuring that we can prioritize the delivery of stored aircraft." This morning, Southwest (LUV) said in a regulatory filing that based on "continued uncertainty around the timing of MAX return to service," the company is proactively removing the MAX from its flight schedule through April 13, 2020.
Shares of Eli Lilly (LLY) rose 2% after the drugmaker hosted a financial guidance conference call and gave a better than expected outlook on its sales and profits in the new fiscal year.
In M&A news, the Federal Trade Commission closed its investigation into Roche Holding's (RHHBY) proposed acquisition of Spark Therapeutics (ONCE), concluding that the evidence "did not indicate that Roche would have the incentive to delay or terminate Spark's developmental effort for its hemophilia A gene therapy, or that the acquisition would affect Roche's incentives regarding Hemlibra."
Bed Bath & Beyond (BBBY) shares gained 11% after the retailer announced what it called "an extensive restructure of its leadership team," including the departure of six senior members. Meanwhile, Roku (ROKU) moved in the opposite direction following its own In management change news. Roku CFO Steve Louden plans to step down after helping the company hire his successor, which sent the stock down 2%.
Meanwhile, Crain's Detroit reported that Ford (F) has been awarded $35.3M in new tax incentives tied to $1.4B in capital investment at its assembly plants in Dearborn and Wayne, Michigan, and the creation of 3,000 jobs. The state's economic development board granted the Dearborn automaker $26M of the remaining $37.6M pot of tax incentives in the Good Jobs for Michigan tax capture program before the program sunsets at year's end, according to the report.
In other auto news, Reuters reported that the board of Peugeot owner PSA (PUGOY) has approved a binding memorandum of understanding to merge with competitor Fiat Chrysler (FCAU). Bloomberg later reported that Fiat Chrysler's board has also approved the deal. The two companies could announce the singing of a binding agreement early on Wednesday, according to the Reuters report.
MAJOR MOVERS: Among the noteworthy gainers was ImmunoGen (IMGN), which rose 19% after it announced an accelerated approval pathway for mirvetuximab soravtansine. Also higher was LogMeIn (LOGM), which gained 4% after it agreed to be acquired by affiliates of Francisco Partners and Evergreen Coast in a deal valued at $86.05 per share.
Among the notable losers was DMC Global (BOOM), which slid 17%% after it lowered its fourth quarter and fiscal 2019 guidance and said that DynaEnergetics will close distribution facilities in Canada and Oklahoma. Also lower was Groupon (GRPN), which fell 9% after Goldman Sachs analyst Michael Ng downgraded the stock to Sell from Neutral.
INDEXES: The Dow rose 31.27, or 0.11%, to 28,267.16
, the Nasdaq gained 9.13, or 0.10%, to 8,823.36
, and the S&P 500 advanced 1.07, or 0.03%, to 3,192.52