Stocks rise as investors cling to hope for more stimulus
Stocks are mildly higher near noon, but it's been a choppy trade. President Trump said he's seeing some progress on stimulus and added that he's looking at more than just airlines, while reports indicate that House Speaker Pelosi and Treasury Secretary Mnuchin are due to continue to talk. However, Pelosi stated earlier in a press conference that no standalone airline assistance will be possible without a larger relief bill. Speaker Pelosi also reportedly rejected authorizing a $1,200 check to individuals - as Trump has said he is prepared to approve - without getting some of Democrat's other demands met.
ECONOMIC EVENTS: In the U.S., initial jobless claims fell 9,000 to 840,000 in the week ended October 3.
TOP NEWS: Shares of IBM (IBM) are 5% higher near noon after the company announced it will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company. The separation is expected to be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021. IBM, which said it will focus on its open hybrid cloud platform and accelerate its hybrid cloud growth strategy, also reported preliminary Q3 earnings that matched the consensus forecast and preliminary Q3 revenue that beat expectations.
In M&A news, Morgan Stanley (MS) announced a deal to acquire Eaton Vance (EV) for an equity value of approximately $7B. Under the terms of the merger agreement, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833x of Morgan Stanley common stock, representing a total consideration of approximately $56.50 per share. Based on the $56.50 per share, the aggregate consideration paid to holders of Eaton Vance's common stock will consist of approximately 50% cash and 50% Morgan Stanley common stock.
In other bank news, the Office of the Comptroller of the Currency assessed a $400M civil money penalty against Citibank (C) related to deficiencies in enterprise-wide risk management, compliance risk management, data governance, and internal controls. In response to the consent order issued by the Office of the Comptroller of the Currency, as well as one issued by the Federal Reserve Board, Citi stated that it was "disappointed that we have fallen short of our regulators' expectations, and we are fully committed to thoroughly addressing the issues identified."
In COVID-19 news, Regeneron (REGN) announced it has submitted a request to the U.S. Food and Drug Administration for an Emergency Use Authorization, or EUA, for its REGN-COV2 investigational antibody combination for COVID-19, following in the footsteps of Eli Lilly (LLY), which said yesterday that it was doing the same for its own investigational antibody treatment for the virus.
McDonald's (MCD) pre-released fiscal third quarter U.S. same-store sales growth of 4.6%, which Stephens analyst James Rutherford noted was above his 2.8% growth estimate and the consensus 2.7% forecast. Meanwhile, Domino's Pizza (DPZ) reported Q3 U.S. same store sales growth of 17.5% as part of its disclosure of quarterly earnings that missed estimates and sales that topped the consensus forecast. Following their sales reports, McDonald's shares are down 1% and Domino's shares have slid nearly 7%.
MAJOR MOVERS: Among the noteworthy gainers was Alphatec (ATEC), which rose 27% after reporting better than expected preliminary third quarter revenue. Also higher was CareDx (CDNA), which gained 18% after guiding to Q3 revenue above consensus.
Among the notable losers was Cytokinetics (CYTK), which fell 45% after the company and partner Amgen (AMGN) announced topline results from GALACTIC-HF, a Phase 3 pivotal clinical trial of omecamtiv mecarbil in patients with heart failure with reduced ejection fraction. Amgen shares were 5% lower after the news. Also lower was Acuity Brands (AYI), which declined 10% after reporting quarterly results.
INDEXES: Near midday, the Dow was up 61.13, or 0.22%, to 28,364.59, the Nasdaq was up 63.71, or 0.56%, to 11,428.31, and the S&P 500 was up 20.18, or 0.59%, to 3,439.63.