COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

Stocks little changed on mergers, data before Fed

Financial markets were little changed Monday as investors await a key series of economic reports and merger activity and optimism over corporate earnings offset concern over crises abroad.

The Dow Jones industrial average gained 22.02 points to 16,982.59. The Nasdaq composite index dipped 4.65 points to 4,444.91 and the S&P 500 stock index eked out a gain of 0.57 points to 1978.91.

Tuesday brings the Case-Shiller report on homes prices in the 20 largest metropolitan areas as well as the July update on consumer confidence from the Conference Board.

Investors will continue to react to more send quarter corporate earnings reports.

Oil prices slipped 42 cents to $101.67 a barrel on reports of rising crude inventories. Gold fell 7 cents to $1,303.30 an ounce.

Discount chain Family Dollar Stores Inc. (NYSE: FDO) soared 25 percent after Dollar Tree Inc. (Nasdaq: DLTR) agreed to buy it for about $8.5 billion.

Trulia (NYSE: TRLA) Inc. jumped 15 percent as Zillow Inc. (Nasdaq: Z) agreed to purchase the company in a $3.5 billion deal.

Tyson Foods Inc. (NYSE: TSN) climbed 2.6 percent to $40.56 as it agreed to sell poultry businesses in Mexico and Brazil for $575 million.

More than 5.4 billion shares changed hands on U.S. exchanges, 5.7 percent below the three month average.

Mergers and acquisitions are booming amid low interest rates and growing corporate cash hoarding. More than $1.1 trillion worth of takeovers have been announced this year, exceeding the total of 2013, data compiled by Bloomberg show.

Quarterly profit growth is poised for the fastest increase in almost three years. Companies in the S&P 500 have reported an 11 percent gain in second-quarter earnings, data compiled by Bloomberg show.

Should the pace continue, the gain would exceed all periods since the third quarter of 2011.

Pfizer Inc. (NYSE: PFE), Reynolds American Inc. (NYSE: RAI) and American Express Co. (NYSE: AXP) are among some 150 S&P 500 companies reporting earnings this week.

About 78 percent of U.S. companies that have posted results this season have beaten analysts’ estimates for profit, while 66 percent exceeded sales projections, according to data compiled by Bloomberg.

Stocks slumped earlier in the day as fewer Americans than forecast signed contracts to buy previously owned homes in June, a sign residential real estate is struggling to strengthen. An S&P index of homebuilder shares dropped 1.2 percent to the lowest level since April.

The S&P 500 recovered Monday after retreating 0.5 percent on July 25 and losing as much as 0.6 percent this morning. Not since the bull market began has buying dips been a surer way of making money.

Declines in the benchmark gauge for American equity are lasting an average of 1.5 days in 2014, the shortest since at least 2009, according to data compiled by Bloomberg.

Starting last year, returns on days after the index fell have averaged 0.13 percent, the highest since they were 0.38 percent in 2009.

Outside the United States, international pressure mounted on Israel to end its three-week offensive in the Hamas-controlled Gaza Strip, with President Barack Obama and the United Nations Security Council demanding an immediate truce.

In Europe, President Vladimir Putin faces intensifying U.S. and European sanctions aimed at forcing him to help end the separatist war in neighboring Ukraine. The Obama administration said it had satellite photos showing Russia firing across the border at Ukraine forces.

The S&P 500 ended little changed last week as investors weighed corporate earnings. The gauge closed 0.5 percent below its all-time high of 1,987.98 reached July 24.

The index has rallied 7.1 percent this year, as the economy shows signs of recovering from a 2.9 percent drop in the first quarter amid renewed pledges from the Fed to continue stimulus.

The U.S. central bank announces its next policy decision at the conclusion of a two-day meeting Wednesday. Investors will get a reading on second-quarter growth that same day, while the government’s labor report on Aug. 1 may show employers added 231,000 jobs this month.

The Fed’s Open Market Committee will scale back its monthly asset purchases to $25 billion from $35 billion Wednesday, according to economists surveyed by Bloomberg, keeping it on pace to end the program late this year.

Dollar Tree added 1.2 percent to $54.87. Family Dollar surged 25 percent to $75.74. The deal will create a sprawling discount chain with $18 billion in sales and more locations than any other retailer in the U.S.

Trulia soared 15 percent to $65.04. The all-stock deal positions a unified Zillow and Trulia to capture a larger share of digital real estate ads as more people shift house hunting onto the Web and property agents deploy more marketing dollars onto the Internet. Zillow gained 0.9 percent to $160.32.

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

User Response
0 UserComments

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

Subscribe Today!