STOCKS GO NOWHERE AFTER SOME MERGER NEWS: Here's What You Need To Know
First, the scoreboard:
- Dow: 16,982.59, +22, (+0.1%)
- S&P 500: 1,978.91, +0.57, (0.03%)
- Nasdaq: 4,444.91, -4.6, (-0.1%)
And now, the top stories on Monday:
1. In the U.S., pending home sales in June fell 1.1%, an unexpected decrease as economists were expecting sales to rise 0.5%. The pace of sales, however, remains above average according to the National Association of Realtors. "Pending home sales remain below their year-ago levels, but after the upward moves during the three months through May, the y/y declines have become smaller," noted Barclays' Michael Gapen. "This report suggests the rebound in existing home sales following previous weather-related softness is complete, implying less momentum to sales in the third quarter."
2. Markit's "flash" services data for July was unchanged from the prior month at 61, which also beat expectation for a 59.9 reading. Of the report, Markit's economist Tim Moore said, "While a cyclical upswing appears underway across the service sector, the latest survey provides some indication that a smoother ride is not yet fully entrenched. Service providers saw new business gains slip to a three-month low, while payroll growth moderated since June amid a drop in confidence towards the year-ahead business outlook."
3. The Federal Reserve Bank of Dallas' latest manufacturing survey came in at 12.7, slightly below the 12.8 that was expected but well better than the 11.4 for the prior survey. BI's Rob Wile noted, however, that the Fed's comments reflected a much more uncertain future. "Skilled employee turnover is getting out of control," one manufacturer said. "There are too many employers chasing too few skilled workers."
4. It was a big day for corporate mergers, as Dollar Tree struck a deal to acquire Family Dollar, while Zillow reached a deal to acquire rival Trulia. Dollar Tree agreed to acquire Family Dollar for $74.50 per share, a 23% premium over Friday's closing price for Family Dollar. Shares of Family Dollar closed up more than 24%. The deal also marks a big win for Carl Icahn, who in June took a stake in the discount retailer and urged it to seek a sale. Later in the afternoon, Icahn issued a statement that said he is still hopeful another bid for Family Dollar will emerge.
5. Zillow agreed to acquire Trulia in an all-stock deal worth about $3.5 billion at current prices. The two online real estate rivals made their merger announcement after a report from Bloomberg last week said that Zillow was seeking to acquire Trulia. Following the deal Trulia shares surged 15%.
6. Shares of chicken chain El Pollo Loco gained another 43% after gaining 50% in their public debut on Friday. BI's Hayley Peterson noted that some investors believe El Pollo Loco could be the next Chipotle, and so far, investors have acted that way.
7. A late afternoon report from Japan's Nikkei reported that Tesla has signed a deal with Panasonic to supply the electric carmaker with machinery to stock its first Gigafactory. Tesla shares popped following the news, but closed unchanged.
8. Some 25 companies are scheduled to make their public debuts this week, which, if this number holds, will mark the busiest week for IPOs since August 2000.
9. Gunmaker Smith & Wesson agreed to pay $2 million to settle charges from the SEC that the company violated the Foreign Corrupt Practices Act in efforts to bribe foreign officials to awarded the company weapons contracts. Smith & Wesson did not admit or deny the SEC's findings.
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