Closing Market Summary: Stocks End Flat with M&A and Earnings in FocusThe stock market ended an upbeat week on a flat note as the S&P 500 (UNCH) retraced most of an 11-point opening drop to finish little changed. The rebound effort featured its fair share of M&A chatter and leadership from the heavyweight consumer discretionary (+0.8%) and technology (+0.6%) sectors. The Nasdaq Composite (+0.3%) settled ahead of both the benchmark index and the Dow Jones Industrial Average (-0.1%). For the week the three indices gained between 0.04% and 0.83%.
The major averages began the day under pressure as strengthening in the dollar and the latest batch of quarterly earnings contributed to opening hour weakness.
The U.S. Dollar Index (98.64, +0.33, +0.33%) extended its winning streak last evening as the pound and the euro each lost ground to the greenback. The buck continued to receive support from an improved U.S. rate hike picture and recent safe-haven flows. Furthermore, the move lower in European currencies came ahead of this weekend's EU Economic Summit, which may provide some Brexit-related headline volatility. The euro and the pound finished down a respective 0.4% (1.0882) and 0.2% (1.2226) against the dollar.
A stronger dollar served as a headwind for dollar-denominated commodities and the earnings prospects of multinational companies. This was on display when General Electric (GE 28.98, -0.09) beat bottom-line estimates for the quarter, but narrowed its guidance range. Meanwhile, Honeywell (HON 108.96, +0.82) gained 0.8% after reporting bottom-line results that fell in-line with the company's earnings warning.
The broader market reversed course after the first hour as a fresh dose of M&A chatter helped boost investor sentiment. The Wall Street Journal reported that AT&T (T 37.49, -1.16) is in advanced talks to acquire Time Warner (TWX 89.48, +6.49). The headline came on the heels of a similar report from Bloomberg in the prior session. Separate rumors indicated that Softbank (SFTBY 31.68, -0.29) could be interested in acquiring Twitter (TWTR 18.09, +1.19). The social media name finished higher by 7.0%.
The benchmark index settled in the top of today's trading range, but was unable to reclaim its flat line. Seven sectors ended in the red with telecom services (-2.3%), health care (-0.9%), and energy (-0.7%) rounding out the leaderboard. On the flipside, consumer discretionary (+0.8%), technology (+0.6%), consumer staples (+0.5%), and financials (UNCH) led the pack.
In the health care space (-0.9%), biotechnology narrowed its weekly gain as Biogen (BIIB 290.65, -9.01) fell 3.0%. The stock was under pressure amid rumors suggesting the company might acquire ACADIA Pharmaceuticals (ACAD 25.34, +1.39). Mylan (MYL 37.02, -0.59) declined by 1.6% after Senator Elizabeth Warren called Mylan's EpiPen settlement with the Department of Justice "shamefully weak."
The commodity-sensitive energy sector (-0.7%) settled at the bottom of the board as oilfield service names weighed. Schlumberger (SLB 80.47, -2.52) declined 3.0% after reporting a mixed quarter last evening. However, it is worth noting that crude oil finished the day in positive territory. WTI crude settled higher by 0.4% ($50.85/bbl, +$0.20).
In the consumer discretionary sector (+0.8%), media names demonstrated relative strength after speculation that Time Warner (TWX 89.48, +6.49) was a takeover target arose. Vicaom (VIAB 37.51,+1.01) and CBS (CBS 57.66, +1.17) finished higher by 2.8% and 2.1%, respectively. Separately, Dow component McDonald's (MCD 113.93, +3.36) finished ahead of the price-weighted average after beating quarterly estimates.
The heavily-weighted technology sector (+0.6%) outperformed as Dow component Microsoft (MSFT 59.69, +2.44) carved out a new all-time high (60.45). The stock rallied 4.3% after beating analysts' estimates for the quarter. Elsewhere, Qualcomm (QCOM 67.93, +0.59) rose 0.9% after CNBC reported that the company is close to acquiring NXP Semiconductor (NXPI 101.71, -2.78) for $110 per share.
Treasuries finished on a higher note as the long end of the curve outperformed. The yield on the 2-yr note settled flat at 0.83% while the yield on the benchmark 10-yr note finished down two basis points at 1.73%.
Today's trading volume was above the average of 853 million as 863 million shares changed hands at the NYSE floor.
There was no economic data of note released today and Monday's economic calendar is similarly vacant.
- Russell 2000: +7.2% YTD
- Nasdaq Composite: +5.0% YTD
- S&P 500: +4.8% YTD
- Dow Jones: +4.1% YTD