Stocks slide after passing of Justice Ginsberg as EU considers re-tightening restrictions
Stocks have tumbled as risk appetite has been undercut by a variety of factors. The passing of Justice Ruth Bader Ginsburg over the weekend added more uncertainty to an already fraught U.S. election and the inability of Congress to enact more fiscal stimulus. In addition, a pick-up in infections across Europe has revived worries that a re-tightening of virus restrictions will be implemented. Meanwhile, the still complicated TikTok saga has taken on the role of the proverbial "canary in the coal mine" for worsening U.S.-China relations.
ECONOMIC EVENTS: In the U.S., the Chicago Fed's National Activity index dropped 1.8 points to 0.79 in August after tumbling 3.3 points in July.
The latest data from the Johns Hopkins Whiting School of Engineering shows there are now 31.1M confirmed cases of COVID-19 worldwide, including 6.82M in the U.S., and 961,459 deaths due to the disease.
TOP NEWS: Oracle (ORCL) and Walmart (WMT) announced tentative approval for an agreement with the U.S. government to resolve the outstanding issues that will now include Oracle and Walmart together investing to acquire 20% of the newly formed TikTok Global business, the companies stated. Walmart said: "While there is still work to do on final agreements, we have tentatively agreed to purchase 7.5% of TikTok Global as well as enter into commercial agreements to provide our ecommerce, fulfillment, payments and other omnichannel services to TikTok Global. Our CEO, Doug McMillon, would also serve as one of five board members of the newly created company." Following the news, RBC Capital analyst Alex Zukin upgraded Oracle to Outperform from Sector Perform with a price target of $68, up from $60. The analyst cites the company's acquisition of TikTok as an Oracle Cloud Infrastructure customer as a potential catalysts to shares. Depending on the valuation at which Oracle invests, there could be as much as 12% upside in market value to Oracle over the next 12 months, Zukin added.
In other M&A news, Illumina (ILMN) announced they have entered into a definitive agreement to acquire GRAIL for cash and stock consideration of $8B upon closing of the transaction. GRAIL was founded by Illumina in 2016 and was spun out as a standalone company, powered by Illumina's NGS technology, to develop data science and machine learning and create the atlas of cancer signals in the blood, enabling multi-cancer early detection tests.
Meanwhile, Microsoft (MSFT) announced plans to acquire ZeniMax Media, the parent company of Bethesda Softworks, which it calls "one of the largest, privately held game developers and publishers in the world," for $7.5B in cash. Bethesda, the creators of gaming franchises including The Elder Scrolls and Fallout, "brings an impressive portfolio of games, technology, talent, as well as a track record of blockbuster commercial success, to Xbox," Microsoft said.
Shares of JPMorgan Chase (JPM) are more than 4% lower near noon after the International Consortium of Investigative Journalists reported that it was among five banks that defied money laundering crackdowns by moving large sums of illicit cash for shadowy characters and criminal networks. In some cases the bank and peers kept moving illicit funds even after U.S. officials warned them they'd face criminal prosecutions if they didn't stop doing business with mobsters, fraudsters or corrupt regimes, the consortium said. Meanwhile, in Reuters' recounting of the documents submitted by banks to the U.S. government, it said the five global banks that appeared most often in the documents were JPMorgan, HSBC (HSBC), Deutsche Bank (DB), Standard Chartered (SCBFY) and Bank of New York Mellon (BK).
Shares of Nikola (NKLA) have plunged 18%, although that is improved from the worst levels seen in pre-market trading, after the electric truck making hopeful announced that Trevor Milton approached the board and proposed to voluntarily step aside as Executive Chairman. The board accepted his proposal, and Stephen Girsky, former Vice Chairman of General Motors (GM) and a member of Nikola's board, has been appointed Chairman of the Board, effective immediately. Wedbush analyst Daniel Ives called the news "shocking," adding that the move will be "perceived as a major near-term gut punch for the company's lofty EV ambitions," although The analyst made no change to his Neutral rating or $45 price target. Meanwhile, Cowen analyst Jeffrey Osborne said he believes the resignation has more to do with attempting to minimize distractions for the company rather than an implicit admission of any guilt alleged in the recent short seller report from Hindenburg Research. Given he sees this outcome as being in the best interest of the company, Osborne keeps an Outperform rating on Nikola shares with a $79 price target.
MAJOR MOVERS: Among the noteworthy gainers was Cubic (CUB), which rose 33% after announcing that its board of directors approved the adoption of a limited-duration shareholder rights plan in response to Elliott Management informing the company privately that it has acquired a direct ownership and derivatives position and that it, and a private equity firm with whom Elliott has partnered, is interested in acquiring Cubic, subject to various conditions.
Also higher was Roku (ROKU), which gained 16% after The Verge reported Comcast (CMCSA) and the company have reached a deal for Peacock to be available to stream on Roku devices in the coming weeks.
Among the notable losers was Legend Biotech (LEGN), which slid 16% after announcing that its CEO Fangliang Zhang is presently under residential surveillance by the People's Republic of China law enforcement.
Also lower was Tenet Healthcare (THC), which fell 15% after JPMorgan analyst Gary Taylor downgraded the stock to Underweight from Neutral on a stalled hospital recovery.
INDEXES: Near midday, the Dow was down 814.45, or 2.94%, to 26,842.97, the Nasdaq was down 140.67, or 1.30%, to 10,652.61, and the S&P 500 was down 73.50, or 2.21%, to 3,245.97.