The major averages are higher this morning with support from M&A and positive vaccine news. The Federal Reserve meets on Tuesday and Wednesday of this week, but Chair Powell largely preempted this meeting in terms of policy with his Jackson Hole announcement of its new strategies to pursue an average inflation target and monitor any shortfall in employment. Though analysts don't anticipate any news on forward guidance, the FOMC is expected to underscore its "lower for longer" policy stance on Wednesday.
ECONOMIC EVENTS: In the U.S., the economic calendar was quiet.
The latest data from the Johns Hopkins Whiting School of Engineering shows there are now over 29M confirmed cases of COVID-19 worldwide, including 6.5M in the U.S., and about 925,000 deaths due to the disease.
TOP NEWS: Over the weekend, Microsoft (MSFT) said in a blog post that ByteDance, the owner of social video app TikTok, had chosen not to sell the U.S. assets of TikTok to the company.
Subsequently, on Monday morning, Oracle (ORCL) confirmed in a press release U.S. Treasury Secretary Steven Mnuchin's statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle "will serve as the trusted technology provider."
Explaining it all, Reuters' Echo Wang and Greg Roumeliotis said Oracle has suggested a deal structured as a partnership, rather than an outright sale, with the U.S. arm of TikTok after China's state-run English television channel said parent ByteDance would not sell TikTok's U.S. operations to either company and would not give the source code for the platform to any U.S. firm. Under the current deal proposed to U.S. authorities, Oracle would be TikTok's technology partner and assume management of TikTok's U.S. user data, while Oracle is also negotiating taking a stake in TikTok's U.S. operations, the reporters' sources said. While Mnuchin told CNBC that the administration would review the proposal this week, it is unclear whether President Donald Trump, who wants a U.S. technology firm to own most of TikTok in the U.S., will approve the deal, the report added.
The cooperation agreement between TikTok and U.S. companies is not limited to Oracle (ORCL), but also includes Walmart (WMT), according to a Chinese-language report from Caixin.
In other M&A news, Nvidia (NVDA) and SoftBank (SFTBY) announced a definitive agreement under which Nvidia will acquire ARM Limited from SoftBank and the SoftBank Vision Fund in a transaction valued at $40B. Under the terms of the transaction, Nvidia will pay to SoftBank a total of $21.5B in Nvidia common stock and $12B in cash, which includes $2B payable at signing. "SoftBank will remain committed to Arm's long-term success through its ownership stake in Nvidia, expected to be under 10%," the companies said.
Additionally, Gilead Sciences (GILD) announced an agreement to acquire Immunomedics (IMMU) for $88.00 per share in a cash transaction that values Immunomedics at approximately $21B. Gilead's price represents a 108% premium to Friday's closing price for shares of Immunomedics following a "remarkable" few months of clinical, regulatory and commercial execution around Trodelvy, noted Piper Sandler analyst Joseph Catanzaro. Meanwhile, Seattle Genetics (SGEN) and Merck (MRK) announced two new strategic oncology collaborations. As part of the agreement, Seattle Genetics will receive a $600M upfront payment and Merck will make a $1B equity investment in 5M shares of Seattle Genetics common stock at a price of $200 per share.
In news on the search for pharmaceutical answers to COVID-19, AstraZeneca (AZN) announced over the weekend that clinical trials for the Oxford coronavirus vaccine, AZD1222, have resumed in the U.K. following confirmation by the Medicines Health Regulatory Authority that it was safe to do so. On September 6, a standard review process had triggered a voluntary pause to vaccination across all global trials to allow review of safety data by independent committees, and international regulators. In addition, Pfizer (PFE) and BioNTech (BNTX) announced that they have submitted an amended protocol to the U.S. Food and Drug Administration to expand the enrollment of their Phase 3 pivotal COVID-19 vaccine trial to up to approximately 44,000 participants which also allows for the enrollment of new populations.
MAJOR MOVERS: Among the noteworthy gainers was Scientific Games (SGMS), which rose 46% after a number of long-term institutional investors agreed to acquire a 34.9% stake in the company from MacAndrews & Forbes at a price of $28 per share. Also higher was Vaxart (VXRT), which gained 40% after the company announced FDA clearance of its investigational new drug application for its oral COVID-19 vaccine candidate.
Among the notable losers was Kala Pharmaceuticals (KALA), which fell 12% after Jefferies downgraded the stock to Hold from Buy after surveying 25 ophthalmologists and 25 optometrists who are based in the U.S. about the potential use of the company's Eysuvis when it comes to market. Also lower was Kroger (KR), which slid 3% after BofA analyst Robert Ohmes downgraded the stock to Neutral from Buy. He has a more muted outlook for the company for the second half of FY21 and FY22, the analyst noted.
INDEXES: Near midday, the Dow was up 368.98, or 1.33%, to 28,034.62, the Nasdaq was up 247.56, or 2.28%, to 11,101.10, and the S&P 500 was up 56.09, or 1.68%, to 3,397.06.
Oracle
+2.91 (+5.10%)
Microsoft
+3.79 (+1.86%)
Walmart
+1.35 (+0.99%)
Nvidia
+29.06 (+5.97%)
Gilead
+1.965 (+3.03%)
Acquired by GILD
+42.52 (+100.59%)
SoftBank Group
+ (+0.00%)
AstraZeneca
+0.41 (+0.76%)
Scientific Games
+8.68 (+45.83%)
Vaxart
+2.09 (+39.51%)
Kala Pharmaceuticals
-1.06 (-12.10%)
Kroger
-1.13 (-3.29%)
Pfizer
+0.93 (+2.58%)
BioNTech
+3.84 (+5.89%)