Stocks end higher as U.S. jobless claims tumble, retail sales surge
Stocks rose to record high levels following data showing retail sales massively exceeded most estimates in March and that jobless claims have fallen to post-pandemic lows.
ECONOMIC EVENTS: In the U.S., initial jobless claims tumbled 193,000 to 576,000 in the week ended April 10, marking a new post-virus low. Retail sales surged 9.8% in March, and climbed 8.4% excluding autos, making for the largest increases since the record gains in May. The Empire State manufacturing index popped 8.9 points to 26.3 in April, which was much better than forecast, while the Philly Fed index also increased to a better than expected 50.2 reading. Industrial production rebounded 1.4% in March and capacity utilization increased to 74.4% from 73.4%. The NAHB housing index edged up 1 tick to an 83 reading in April. Business inventories rose 0.5% in February and sales dropped 1.9%.
TOP NEWS: Shares of Dell Technologies (DELL) rose 6.7% after the company announced an agreement on the planned spin-off of its 81% equity ownership interest in VMware (VMW). At the transaction closing, VMware will distribute a special cash dividend of $11.5B-$12B to all VMware shareholders, including Dell Technologies. Based on Dell Technologies' current 80.6% ownership in VMware, Dell Technologies would receive approximately $9.3B-$9.7B and intends to use the net proceeds to pay down debt, "positioning the company well for Investment Grade ratings," Dell said.
In earnings news, financials were the headliners for a second straight day as Citi (C), Bank of America (BAC) and BlackRock (BLK) were among those issuing updates on their first quarter results. In addition to reporting earnings, Citi announced plans to pursue exits from consumer franchises in thirteen markets and focus its Global Consumer Bank presence in Asia and EMEA on four wealth centers - Singapore, Hong Kong, the UAE and London.
Among notable earnings reporters outside of the financial space, UnitedHealth (UNH) was up 3.9% following its quarterly results, while PepsiCo (PEP) was little changed and Delta (DAL) fell 2.8%.
In M&A news, Thermo Fisher Scientific (TMO) announced an agreement to acquire PPD, Inc. (PPD) for $47.50 per share for a total cash purchase price of $17.4B plus the assumption of approximately $3.5B of net debt. The transaction is expected to be "immediately and significantly accretive to Thermo Fisher's adjusted EPS, adding $1.40 in the first 12 months after close," Thermo Fisher said.
In COVID-19 news, Merck (MRK) announced the discontinuation of development of MK-7110 for the treatment of hospitalized patients with COVID-19, citing the expected timeline, "technical, clinical and regulatory uncertainties," the availability of a number of medicines for patients hospitalized with COVID-19, and "the need to concentrate Merck's resources on accelerating the development and manufacture of the most viable therapeutics and vaccines." Meanwhile, Pfizer (PFE) CEO Albert Bourla told CNBC that a third dose of the company's COVID-19 vaccine will likely be needed sometime within six and 12 months.
In SPAC news, Bloomberg reported that special purpose acquisition company D and Z Media Acquisition (DNZ), which is co-sponsored by Intercontinental Exchange (ICE), is in discussions to combine with Simplifi Holdings, an advertising technology platform. The blank check company is seeking to raise new equity to support a deal that values the combined company at $1.5B or more, according to Bloomberg.
MAJOR MOVERS: Among the noteworthy gainers was Weingarten Realty (WRI), which rose 12.4% after agreeing to merge in a stock and cash deal with Kimco Realty (KIM). Kimco shares closed 2.3% higher after the merger news. Also higher was Wipro (WIT), which gained 7.3% after reporting quarterly results.
Among the notable losers was QuantumScape (QS), which declined 12.2% after Scorpion Capital issued a cautious report on the stock. Also lower was Virgin Galactic (SPCE), which fell 13.6% after Virgin Investments sold a 5.58M share stake in Virgin Galactic for $150M.
INDEXES: The Dow rose 305.10, or 0.90%, to 34,035.99, the Nasdaq gained 180.92, or 1.31%, to 14,038.76, and the S&P 500 advanced 45.76, or 1.11%, to 4,170.42.