Stocks kick off week with rise, shrugging off coronavirus fears
Stocks are rising in the U.S. as some factory workers in China that had an extended holiday due to the coronavirus tentatively return to work. However, many factories there remain closed as the virus continues to spread and reports indicate that the official death toll now exceeds that of the SARS outbreak. For now, however, the U.S. market is shrugging off the concerns about the virus' spread and resuming the rally that had been briefly interrupted on Friday.
ECONOMIC EVENTS: In the U.S., no economic data of note was reported.
TOP NEWS: Shares of Tesla (TSLA) are up 3% after Reuters reported that the company's Shanghai factory will resume production with Chinese government assistance to help it cope with the coronavirus outbreak. Also of note, a Forbes contributor forwarded the speculative argument that Tesla's value could rise to $1.5T aided by a $1,500 per share deal with Google (GOOGL).
Shares of Eli Lilly (LLY) are down 2% near noon after solanezumab failed to meet the primary endpoint of the Dominantly Inherited Alzheimer Network Trials Unit, or DIAN-TU, Study. At this time, Lilly does not plan to pursue a submission for solanezumab in people with dominantly inherited Alzheimer's disease, or DIAD, also known as autosomal dominant Alzheimer's disease, the company noted. Biogen (BIIB), which is developing its own high-profile potential treatment for Alzheimer's disease, aducanumab, is down 1% following Lilly's news.
In M&A news, Simon Property Group (SPG) announced a deal to acquire an 80% ownership interest in The Taubman Realty Group. Simon, through its operating partnership, Simon Property Group, L.P., will acquire all of Taubman Centers (TCO) common stock for $52.50 per share in cash and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner in TRG.
Meanwhile, HP Inc. (HPQ) shares are up 2% to $22.14 after Xerox (XRX) said it intends to launch a tender offer for all of the outstanding shares of HP at an increased price of $24.00 per share. Xerox, which said its new bid will be made up of $18.40 in cash and 0.149 Xerox shares for each HP share, saw its stock rise 1.5% following the announcement.
Edgewell Personal Care (EPC) are also rising, jumping over 26% after the company gave up on its deal to buy rival razormaker Harry's following the FTC filing of a lawsuit seeking to block the proposed transaction.
MAJOR MOVERS: Among the noteworthy gainers was McKesson (MCK), which rose 4% after the company announced the start of an exchange offer for the split-off of its wholly-owned subsidiary, PF2 SpinCo, which will hold all of McKesson's interest in Change Healthcare (CHNG) as part of McKesson's previously announced planned exit from its investment in Change Healthcare via a "Reverse Morris Trust" transaction. Also higher was L Brands (LB), which gained 2% after Lauren Hirsch of CNBC reported that the company is nearing a deal to sell its Victoria's Secret brand to private equity firm Sycamore Partners. After the report, MKM Partners analyst Roxanne Meyer said Sycamore is a credible buyer and could likely finance the deal mostly with equity, telling investors in a research note that she sees the price of Victoria's Secret in the $2.0B-$3.4B range.
Among the notable losers was Diamond Offshore (DO), which fell 11% after reporting on its fourth quarter results. Also lower was Biohaven Pharmaceutical (BHVN), which dropped 12% after reporting on a failed Phase 3 clinical trial evaluating troriluzole compared to placebo for the treatment of patients with generalized anxiety disorder.
INDEXES: Near midday, the Dow was up 68.69, or 0.24%, to 29,171.20, the Nasdaq was up 57.34, or 0.60%, to 9,577.86, and the S&P 500 was up 10.90, or 0.33%, to 3,338.61.