The major averages are mixed at midday with the Dow fractionally higher and the Nasdaq down over 1%. The tug of war on sentiment continues, with the recovery narrative supported by upbeat news on vaccines and widespread expectations for more stimulus. However, inflation worries, the improving growth outlook and the very same stimulus hopes are driving Treasury yields higher, which undercuts equity valuations.
ECONOMIC EVENTS: In the U.S., ADP reported private payrolls increased 117,000 in February, which was well below Bloomberg's consensus forecast of 205,000. The final February Markit services PMI rose 1.5 points to 59.8 from a 58.3 reading in January. However, the ISM services index dropped 3.4 points to a 9-month low of 55.3 in February, missing expectations.
TOP NEWS: Shares of Dollar Tree (DLTR) were 5% higher near noon after the discount retailer reported better than expected fourth quarter earnings, with enterprise same-store sales increasing 4.9% year-over-year on a constant currency basis. In addition, the retailer guided for 600 store openings in fiscal 2021.
In other earnings news, Nordstrom (JWN) shares were 5% lower near noon despite the department store operator reporting better than expected Q4 earnings and revenue and guiding for fiscal 2021 revenue growth of over 25%. Of note, however, the company said it is taking actions to "significantly reduce inventory levels" in the first quarter and be fully repositioned in the second quarter.
On the M&A front, shares of Michaels (MIK) surged 23% higher after funds managed by affiliates of Apollo Global (APO) agreed to acquire the craft goods retailer in a transaction that values the company at an equity value of roughly $3.3B, for a transaction valued at $5B. Under the terms of the agreement, which has been unanimously approved by the Michaels board, Apollo will commence a tender offer to acquire all outstanding shares of Michaels for $22.00 per share in cash.
In other M&A news, Las Vegas Sands (LVS) announced that it entered into definitive agreements to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center, for an aggregate purchase price of approximately $6.25B. Under the terms of the agreement, an affiliate of funds managed by affiliates of Apollo Global will acquire subsidiaries that hold the operating assets and liabilities of the Las Vegas business for approximately $1.05B in cash and $1.2B in seller financing in the form of a term loan credit and security agreement, and VICI Properties (VICI) will acquire subsidiaries that hold the real estate and real estate-related assets of The Venetian for approximately $4B in cash.
Meanwhile, General Motors (GM) was in focus after Bloomberg reported that Cruise, the self-driving vehicle company majority owned by GM, is in discussions to buy Voyage, an autonomous technology startup. If a deal is reached, it would combine Cruise's engineering and software capabilities with Voyage's presence in the retirement community market, according to Bloomberg.
Additionally, Reuters reported that Samsung (SSNLF) is evaluating two sites in Arizona and another in New York in addition to Austin, Texas, for a new $17B chip plant.
MAJOR MOVERS: Among the noteworthy gainers was Ovid Therapeutics (OVID), which surged 34% after announcing that Takeda (TAK) has entered into an exclusive agreement under which it will secure global rights at closing from Ovid to develop and commercialize the investigational medicine soticlestat. Also higher was Lyft (LYFT), which gained 9% after raising its Q1 adjusted EBITDA guidance.
Among the notable losers was Vir Biotechnology (VIR), which dropped 32% after the Data and Safety Monitoring Board recommended that the VIR-7831 arm of the NIH's Accelerating COVID-19 Therapeutic Interventions and Vaccines Program Phase 3 clinical trial be closed to enrollment. Also lower was Wendy's (WEN), which fell 5% after reporting quarterly results.
INDEXES: Near midday, the Dow was up 94.67, or 0.30%, to 31,486.19, the Nasdaq was down 151.66, or 1.14%, to 13,207.13, and the S&P 500 was down 11.08, or 0.29%, to 3,859.21.
Dollar Tree
+5 (+5.05%)
Nordstrom
-1.87 (-4.99%)
Michaels
+4.15 (+23.02%)
Apollo Global
+1.06 (+2.12%)
Las Vegas Sands
+1.18 (+1.82%)
VICI Properties
+0.25 (+0.87%)
General Motors
-0.29 (-0.54%)
Samsung
+ (+0.00%)
Ovid Therapeutics
+1.055 (+35.70%)
Takeda
+0.3 (+1.74%)
Lyft
+4.99 (+8.75%)
Vir Biotechnology
-18.05 (-31.23%)
Wendy's
-1.05 (-4.93%)