Stocks mixed at midday with Dow in green, Nasdaq sliding
The major averages are mixed at midday as a variety of factors weigh on tech stocks but the Dow has been able to notch a small gain near noon. The run-up in interest rates and refinancing costs has become a source of worry for equities as valuations remain elevated with Wall Street just shy of record highs. Additionally, the good news that vaccinations are increasing and hospitalizations are falling is being countered by ongoing news of virus mutations that run the risk of delaying the return to normal activities that the market has priced-in.
ECONOMIC EVENTS: In the U.S., the Chicago Fed national activity index rose 0.25 points to 0.66 in January. The leading economic indicators index increased 0.5% to 110.3 in January. The Dallas Fed's manufacturing index bounced 10.2 points to 17.2 in February.
Data from the Johns Hopkins Whiting School of Engineering shows there are now 111.5M confirmed cases of COVID-19 worldwide, including 28.1M in the U.S., and nearly 2.5M deaths due to the disease, including almost 500,000 in the U.S.
TOP NEWS: Over the weekend, the New York Times reported that a United Airlines (UAL) flight with 241 passengers on board experienced an engine failure over Colorado, shedding debris across three neighborhoods before landing safely in Denver. While there were no injuries reported, the Federal Aviation Administration said the plane, a Boeing (BA) 777-200, experienced a "right-engine failure" shortly after takeoff and that it was aware of reports of debris "in the vicinity of the airplane's flight path." After United said it would temporarily stop flying certain Boeing 777 planes, the planemaker said it is actively monitoring recent events related to United Airlines Flight 328" and that it recommends suspending operations of 777s powered by Pratt & Whitney, a subsidiary of Raytheon (RTX).
On the M&A front, Goodyear Tire (GT) agreed to acquire Cooper Tire (CTB) in a transaction with a total enterprise value of roughly $2.5B. Under the terms of the transaction, which has been approved by the boards of both companies, Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share for a total equity value of approximately $2.8B. Shares of Goodyear and Cooper jumped a respective 21% and 30% after the news.
In other M&A news, M&T Bank (MTB) agreed to acquire People's United Financial (PBCT) in an all-stock deal, with an implied total transaction value based on February 19 closing prices of roughly $7.6B. Under the terms of the agreement, People's United shareholders will receive 0.118 of a share of M&T common stock for each People's United share they own. Following completion of the transaction, former People's United shareholders will collectively own approximately 28% of the combined company. People's United shares rose 14% after the announcement.
Meanwhile, Sanofi (SNY) and GlaxoSmithKline (GSK) announced the initiation of a new Phase 2 study with 720 volunteers aged 18 and over to select the most appropriate antigen dosage for Phase 3 evaluation of their adjuvanted recombinant protein COVID-19 vaccine candidate.
Additionally, Kohl's (KSS) shares were 8% higher near noon after The Wall Street Journal reported that a group of activist investors has a big stake in Kohl's and is attempting to take control of the department-store chain's board. A group that includes activists Macellum Advisors GP, Ancora Holdings and Legion Partners Asset Management, as well as 4010 Capital, controls a combined 9.5% stake in Kohl's and earlier this year nominated nine people to its now-12-person board, according to the Journal. In response, the company said the Kohl's board and management team "have been engaged in discussions with the Investor Group since early December, and we remain open to new ideas that will improve our operating performance and capital allocation. However, we reject the Investor Group's attempt to seize control of our Board and disrupt our momentum, especially considering that we are well underway in implementing a strong growth strategy and accelerating our performance, and we have refreshed half our Board with six new independent directors since 2016."
MAJOR MOVERS: Among the noteworthy gainers was Vuzix (VUZI), which rose 23% after it was revealed that Cathie Wood's ARK Invest bought over 290,000 shares in the company. Also higher was GasLog (GLOG), which gained 18% after it reported quarterly results and agreed to a take private transaction with BlackRock's (BLK) Global Energy & Power Infrastructure team.
Among the notable losers was Ebix (EBIX), which declined 40% after RSM US LLP notified the company's Audit Committee of the firm's resignation as the company's independent registered public accounting firm, stating in its letter that its resignation was the "result of being unable, despite repeated inquiries, to obtain sufficient appropriate audit evidence that would allow it to evaluate the business purpose of significant unusual transactions that occurred in the fourth quarter of 2020." Also lower was MoneyGram (MGI), which fell 24% after reporting quarterly results.
INDEXES: Near midday, the Dow was up 73.59, or 0.23%, to 31,567.91, the Nasdaq was down 227.64, or 1.64%, to 13,646.83, and the S&P 500 was down 16.27, or 0.42%, to 3,890.44.