Dow Jones down more than 150 points
TSX is back in business
Inflation climbs to 1.9% in March
Andeavor becomes a top gainer after acquisiton announcement
It was a rough Monday for U.S. benchmarks, with the major indices slipping downward.
The Nasdaq was down more than 50 points, pulled down as Microsoft shares declined more than 2% to US$93.52.
The S&P 500 was down more than 20 points, dragged lower by telecom stocks.
The TSX was back up and running after a Friday afternoon outage and saw slight gains by the end of the day.
McDonald’s was one of the top gainers of the day after its first-quarter earnings beat consensus estimates on earnings per share and same store sales. Shares were up 6% to US$167.70.
Shares of oil refiner Andeavor jumped after the announcement that rival Marathon Petroleum will buy the company in a US$23bn deal. Shares rose around 13% to US$138.32 by the closing bell.
Arconic (NYSE:ARNC) was a top decliner of the day after the aluminum products maker lowered its profit outlook for the year due to rising aluminum prices. Shares of the New York-based company plummeted more than 20% to US$17.81 in Monday trading.
Shares of T-Mobile US Inc (NASDAQ:TMUS) and Sprint Corp (NYSE:S) were down after news of a merger of the two telecommunications giants. T-Mobile shares fell more than 6% to US$60.51, while Sprint shares fell more than 13% to US$5.61.
US stocks gave up their early gains as they headed into the afternoon sessions, with traders seemingly spooked by a surge in inflation.
The personal consumption expenditures (PCE) price index jumped 1.9% in the year to March – the biggest gain since February 2017.
The rise was in-line with what economists had predicted but didn’t some from wondering if the fact that inflation is quickly climbing up to the Fed’s 2% target meant more rate rises would be on the card.
Most commentators aren’t expecting any dramatic changes to the Fed’s strategy on the back of the data though.
Inflation worries offset some fairly strong gains earlier on Monday, with McDonald’s Corporation (NYSE:MCD) chief among the blue-chip risers after topping forecasts with first-quarter sales and profits.
The burger giant’s shares are up 4.4% to US$165.29 making it the top performer on the Dow Jones Industrial Average, although the index is down 57.3 points, or 0.2%, to 24,253.9.
The broad-based S&P 500 has also fallen into the red after making a strong start to the week, and it is currently down 10.6 points, or 0.4%, to 2,659.5.
The tech-heavy Nasdaq is down 34.5 points, or 0.5%, to 7,085.2. It had been as high as 7,168 earlier on.
Among the small caps, a sharp rise in the shares of Financial Engines Inc (NASDAQ:FNGN) couldn’t keep the Russell 2000 in the black.
The asset manager is up almost a third to US$44.72 after it agreed to be acquired by private equity firm Hellman & Friedman in a deal valued at US$3.02bn.
But the index is still nursing losses overall, down 0.86 points, or 0.6%, to 153.83.
Merger Monday and a series of impressive results kicked off the start of the week and the end of April, pushing the benchmark indices to a positive start.
Shortly after the bell, the Dow Jones was up 120.52 points or up 0.49% at 24,428.27
The S&P 500 added 7.64 points at 2,679.18 while the tech-heavy Nasdaq was up 28.84 points at 7,150.95
Up in Toronto, the TSX was up 18.95 at 15,687.88.
The yield on ten-year Treasuries dropped 4 basis points to trade at 2.96%, sending a signal that investors are less worried about borrowing costs.
McDonald’s Corporation (NYSE:MCD) shares jumped 5.24% to US$166.32 after posting better-than-expected first-quarter earnings.
The fast-food giant’s expanded value offering is getting more people through the door, but the higher-ticket items such as its new Big Mac range are the main drivers for sales growth, the company said.
The company recorded its fifth consecutive quarter of positive guest counts, according to president and CEO Steve Easterbrook.
On merger news, leading the pack was Sprint Corp (NYSE:S) which saw its shares plunge 13.04% US$5.66 while after T-Mobile US Inc (NASDAQ:TMUS) also lost ground, down 5.24% to US$61.19 after announcing a merger between the two largest wireless companies.
T-Mobile and Sprint have a long history of insulting each other -- check out these harsh exchanges https://t.co/6oLJcYJgui— CNBC (@CNBC) 30 April 2018
The combined entity will have the ability to create a large scale 5G network and thousands of US jobs.
Walmart Inc (NYSE:WMT) shares jumped up 2.29% at US$89.29 after announcing its UK arm, Asda Group Ltd has agreed to a merger with another big name in the supermarket industry, J Sainsbury plc (LON:SBRY), creating a combined entity with annual revenue of about US$69bn.
Marathon Petroleum Corp (NYSE:MRO) gained 0.99% at US$18.40 after confirming plans to acquire rival refiner Andeavor (NYSE:ANDV) in a US$35.6bn deal Andeavor surged 16.26% at US$142.78.
And the merger story continues with Marriott Vacations Worldwide Corp (NYSE:VAC), which fell 8.41% at US$121.27 after announcing plans to buy up fellow peer ILG Inc (NASDAQ:ILG) in a US$4.7bn deal. ILG’s shares on the other hand rose 4.78% at US$34.17.
Prologics Inc (NYSE:PLD) investors did not take kindly to its plans to buy competitor DCT Industrial Trust Inc (NYSE:DCT) for US$8.4bn. Prologics shares were down 2.60% at US$64.54 while DCT surged 11.86% at US$65.64.
On the economic data front, the PCE index, hit the Federal Reserve’s target for the first time in a year, rising 2% year-on-year from 1.7% in February.
The Chicago PMI for April came in at 57.6. A reading of 50 and above indicates improving economic conditions.
Pending-home sales index rose 0.4% to 107.6 in March from a downwardly revised February reading.