Stocks looked initially like they could give back some of Friday's gains following reports that China was cautioning that the "phase one" trade deal touted by the U.S. was not a deal at all, but simply represented progress toward a deal. Treasury Secretary Steve Mnuchin took to CNBC to refute that view, acknowledging that while the deal hadn't been fully documented and signed, he viewed it as a "substantial" agreement which he expects to be signed before tariffs scheduled for December take effect. The averages have recovered and are little changed near noon in a slow-moving session marked by lighter volumes, which may be largely attributable to the Columbus Day holiday closing the bond market.
ECONOMIC EVENTS: In the U.S., no economic data of note was released this morning. Key economic releases later this week include the advance retail sales report and housing starts and building permits data for September.
COMPANY NEWS: After the close on Friday, Boeing announced that its board of directors has separated the roles of chairman and chief executive officer. Dennis Muilenburg continues as CEO, president and a director, while David Calhoun, current independent lead director, will now serve as non-executive chairman. Subsequently, The New York Times' Natalie Kitroeff and David Gelles reported that the decision to strip Muilenburg of his chairman title came after months of internal debate over whether to hold top executives accountable after the two deadly 737 MAX crashes that have grounded that aircraft. The Boeing board had resisted stripping Muilenburg of the chairmanship for months and in April a shareholder proposal to split the chairman and CEO roles was voted down, the report noted.
In M&A news, Parsley Energy (PE) announced an agreement to acquire Jagged Peak Energy (JAG) in an all-stock transaction valued at approximately $2.27B, including Jagged Peak's net debt. Under the terms of the agreement, Jagged Peak shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley Class A common stock for each share of Jagged Peak common stock they own, which the companies said represents $7.59 per Jagged Peak share based on Parsley's closing price on October 11. Following the merger announcement, Jagged Peak shares are fractionally lower at midday, while Parsley shares have slid 9%.
MAJOR MOVERS: Among the noteworthy gainers was Reata Pharmaceuticals (RETA), which gained 8% after SVB Leerink analyst Joseph Schwartz raised his price target for the stock to $180 from $139, citing his view that Bardoxolone methyl remains a key growth driver with Phase 3 data expected in the near-term. Also higher was Hilton Grand Vacations (HGV), which jumped 6% after Bloomberg's Gillian Tan and Scott Deveau reported that Apollo Global (APO) made a first round bid for the company of about $40 per share. The report, which cites sources, said Blackstone (BX) is also a bidder.
Among the notable losers was SmileDirectClub (SDC), which sunk 10% after the Governor of California signed Assembly Bill 1519, which extends the state Dental Board’s authority to oversee and regulate dental services until January 1, 2024. Also lower was Crowdstrike (CRWD), which declined 9% after Citi analyst Walter Pritchard initiated coverage of the stock with a Sell rating and $43 price target.
INDEXES: Near midday, the Dow was up 30.69, or 0.11%, to 26,847.28, the Nasdaq was down 4.20, or 0.05%, to 8,052.84, and the S&P 500 was down 1.28, or 0.04%, to 2,968.99.
Boeing
+1.19 (+0.32%)
Parsley Energy
-1.625 (-9.57%)
Jagged Peak Energy
-0.04 (-0.59%)
Reata Pharmaceuticals
+7.79 (+8.13%)
Hilton Grand Vacations
+2.18 (+6.67%)
Apollo Global
-0.2 (-0.52%)
Blackstone
-0.56 (-1.19%)
SmileDirectClub
-1.07 (-9.64%)
Crowdstrike
-5.63 (-9.35%)