Stocks end lower as mega-cap tech names pull back from record levels
Stocks slid as Microsoft (MSFT), Apple (AAPL) and other big tech names led markets lower with their losses. Japan has reported two deaths and South Korea confirmed its first fatality from the coronavirus and a report said the illness was spreading in Beijing, all of which kept investors on edge with the major averages in the U.S.near record highs.
ECONOMIC EVENTS: In the U.S., initial jobless claims rose 4,000 to 210,000 in the week ended February 15, matching expectations. The Philly Fed manufacturing index surged 19.7 points to 36.7 in February, which was much stronger than forecast. The leading economic index popped 0.8% to 112.1 in January, hitting a new all time high.
TOP NEWS: There was plenty of M&A news today, headlined by Morgan Stanley's (MS) $13B all-stock deal to acquire E-Trade (ETFC). E-Trade stockholders will receive Morgan Stanley shares that represent a per share consideration of $58.74 based on the closing price of the bank's common stock on February 19. Following the news, CNBC reported that Goldman Sachs (GS) had plenty of chances to make a bid for E-Trade, but decided against doing so in part because its own direct-to-consumer unit Marcus had already gathered over $50B in consumer deposits. E-Trade shares finished the day 21.8% higher at $54.73, while Morgan Stanley shares fell 4.55% following the deal announcement.
In other deal news, L Brands (LB) and private equity firm Sycamore Partners announced a strategic transaction that will position Bath & Body Works as a standalone public company and separate Victoria's Secret Lingerie, Victoria's Secret Beauty and PINK into a privately-held entity. Victoria's Secret will be separated from L Brands into a privately-held company majority-owned by Sycamore, which will purchase a 55% interest in Victoria's Secret for approximately $525M. Following the announcement, which had been foreshadowed in recent media reports, L Brands shares declined 4.8%.
Meanwhile, Dialog Semiconductor (DLGNF) announced an agreement to acquire all outstanding shares of Adesto Technologies (IOTS) for $12.55 per share in cash, or for approximately $500M enterprise value.
Additionally, Ameresco (AMRC) shares rose 3.6% after Reuters reported that France's Engie (ENGIY) had approached the company to express interesting in acquiring it.
On the earnings front, shares of ViacomCBS (VIAC) fell 17.9%% following the company's first quarterly report since its merger closed in early December. The combined company's earnings performance and outlook trailed analysts' consensus estimates, though there may be some issues of comparability as the company noted a "significant" set of merger-related items that were a headwind in the fourth quarter.
In other news, Procter & Gamble (PG) was in focus after the company said that store traffic in China is "down considerably" as a result of the coronavirus outbreak.
MAJOR MOVERS: Among the noteworthy gainers was Domino's Pizza (DPZ), which rose 25.6% after it reported better than expected quarterly results and raised its quarterly dividend 20%. Also higher after reporting quarterly results were Stamps.com (STMP) and Community Health (CYH), which gained a respective 65.5% and 40%.
Among the notable losers was Six Flags (SIX), which dropped 16.1% after the company's quarterly report included a dividend cut, significantly lowered financial outlook, a promise of a new strategic direction for the company, and announcement of a new CFO. Also lower were Tivity Health (TVTY) and Aaron's (AAN), which dropped 45.5% and 19%, respectively, after reporting quarterly results.
INDEXES: The Dow fell 128.05, or 0.44%, to 29,219.98, the Nasdaq lost 66.21, or 0.67%, to 9,750.96, and the S&P 500 declined 12.92, or 0.38%, to 3,373.23.