>>> Meggitt rumoured to be in line for GBP 5bn cash offer from United Technologi

Meggitt rumoured to be in line for GBP 5bn cash offer from United Technologies

United Technologies, the support-services group based in Hartford, Connecticut, is rumoured to be preparing a GBP 5bn (EUR 6.3bn) offer for London-listed Meggitt, The Daily Mail reported.

The market report said chatter circulating at the Farnborough Air Show this week suggested a cash bid for the UK-based manufacturer of aircraft components may be imminent, pitched at 625p per share.

Meggitt’s stock was trading at 490.1p by yesterday’s close of trading and the company has a market capitalisation of just under GBP 4bn.


Source Daily Mail

>>> What to look at today - 16/07/2014

US Market closed lower, even with strong earnings from JPM (+3,5%) & GS (+1,3%) which closed higher , Yellen Testimony pushed mkt lower, LO tumbled 10,5% after agreeing to be acquired by RAI...Telco +0,7% & utilities +0,5%, volume were above average @ 716mil shares, today we will have MBA Mortgage, June PPI, Net long term TIC Flows, June Ind. Prod. & capacity of utilization, NAHB Housing for July & July Fed Beige Book...VIX @ 11,96 +1,18%...Another busy day for earnings ( ABT, SCHW, BLK, USB, BAC, EBAY...)...In After Hours INTC +4.5% after beating Q2 Est. & rasising FY14 Guidance, announced a $20b share buy back, YHOO -2%, missed numbers, will keep bigger stake of Alibaba...Apple announced dpartnership with IBM...China Q2 GDP and June industrial production topped expectations, however risk-on assets as AUD, SP500 futures, and China stocks are falling modestly post-data. Investors appear to be less inclined to anticipate a more aggressive round of stimulus beyond the "targeted measures...Nikkei +0.01% Hang Seng +0.02%...Shanghai -0,40%


Eur$ 1.3560 S&P Unch EuroStoxx +0.16% FTSE +0.08% Dax -0.04% SMI +0.16%

Macro
- U.S. 2Q Tracking GDP Est. Raised to +3.4% From +3.2%: Goldman
- *GOLDMAN CUTS EURO FORECAST TO $1.35 IN 3 MONTHS FROM $1.38
- France Should Not Get EU Monetary Post: Merkel Ally Tells Paper


Keep an eye on :
- ADP FP : Aeroports de Paris Proposes de Beaune as Chairman, CEO
- AIR FP : Qatar Airways Seeks Compensation for A380 Delay: Reuters {http://reut.rs/1qdsrdD}
- AIR FP : Airbus Defence & Space review targeting year end completion - CFO
- AIR FP : Airbus May Offer Poland Deal to Win $3b Copter Contract: Reuters
- ASML NA : MORE: ASML 2Q Gross Margin Beats; Sees FY Sales Missing Ests.
- BES PL : BES Able to Raise Capital, Bank of Portugal Governor Says: TVI
- BES PL : CMVM Bans Naked Short Selling of Banco Espirito Santo Shares
- BG/ LN : BG Seeking Bids for Queensland Assets by Late Aug: Australian
- CDR SM : Codere Says Signed New Standstill Agreement With Creditors
- CFG SM : Campofrio Names Pedro Ballve as Chairman, Wan Long Vice-Chairman
- CO FP : Casino 2Q Total Rev., France Hypermarket LFL Sales Beat Ests.
- DTE GY : Paulson Supports Potential Sprint/T-Mobile Deal, WSJ Says
- EL1V FH : Elisa 2Q Earnings in Line With Analyst Ests.; Sees Rev Growth
- GTK IM : GTECH to Buy International Game for $4.7b in Cash and Stock
- KVAER NO : Kvaerner 2Q Net Rises Less Than Estimated; Order Intake NK5.36b
- MMB FP : Lagardere Plans to Sell LS Distribution Unit, Les Echos Says
- OMV AV : OMV Petrom Has Oil Discovery in Black Sea
- ORP FP : Orpea 2Q Rev. EU463m Vs EU398m
- POP SM : Popular Looking at Three M&A Targets in U.S., Cinco Says
- PTC PL : Anatel Must Approve Any Change in PT Stake in Oi Deal: Rezende
- PTC PL : Portugal Telecom, OI Sign MOU After Rio Forte Non-Payment
- RIO LN : Rio Tinto 2Q Iron Ore Attributable Output in Line With Est.
- SAB LN : SABMiller Holders Advised by PIRC to Oppose Pay Report, Policy
- SY1 GY : K+S, Symrise Cut at Nomura; Says 2Q Chemicals Rebound Unlikely
- TEL2B SS : Tele2 Changes 2014 Forecasts After Norway Sale
- FP FP : Total Pulls Some Workers From Libya Due to Violence: WSJ Link
- CSS FP : Vivarte Close to Accord With Creditors, Les Echos Reports

>>> Brokers Upgrades & Downgrades

>>> Up
*BWIN.PARTY RAISED TO NEUTRAL VS SELL AT CITI
*FERRAGAMO RAISED TO HOLD VS SELL AT SOCGEN; PT EU21.5 UNCHANGED
*FIELMANN RAISED TO HOLD VS SELL AT BANKHAUS LAMPE
*RSA INSURANCE CUT TO SELL VS NEUTRAL AT UBS
*SPAR GROUP RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*SYNGENTA RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE

>>> Down
*APR ENERGY CUT TO NEUTRAL VS BUY AT CITI
*AVENG CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
*ISRAEL CHEMICALS CUT TO NEUTRAL VS BUY AT CITI
*K+S CUT TO REDUCE VS NEUTRAL AT NOMURA
*LENTA CUT TO NEUTRAL VS BUY AT UBS
*SHOPRITE CUT TO UNDERWEIGHT VS OVERWEIGHT AT BARCLAYS
*SYMRISE CUT TO REDUCE VS NEUTRAL AT NOMURA
*SYNGENTA CUT TO HOLD VS BUY AT BERENBERG
*YARA CUT TO NEUTRAL VS BUY AT CITI

>>> PT Changes


>>> Initiation
*SHOPRITE HOLDINGS RATED OVERWEIGHT AT MORGAN STANLEY
*SPAR GROUP RATED EQUALWEIGHT AT MORGAN STANLEY
*UK MAIL RATED NEW BUY AT CANTOR; PT 700P

>>> Call
>> Stock
*AMADEUS IT, BABCOCK EXIT GOLDMAN CONVICTION BUY LIST, STAY BUY
*BRENNTAG, RANDSTAD EXIT GOLDMAN CONVICTION BUY LIST, STAY BUY

>>> US After Hours

After Hours Summary: INTC +4.1%, CTAS +1.6%, ININ -20.4%, ITI -9.1%, IBKR -2.9%, YHOO -2.3% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: INTC +4.1%, CTAS +1.6%

Companies trading higher in after hours in reaction to news: ZIPR +118.5% (to be acquired by Realogy (RLGY) for $6.75 per share in an all-cash transaction valued at ~$166 mln), ICAD +6.6% (acquired DermEbx and Radion to provide skin cancer treatment solution to the dermatology market; expected to be immediately accretive to revs and operating cash flow), SIRI +2.1% (announced additional $2 billion repurchase program), IBM +1.8% (co and Apple announced an exclusive partnership to transform enterprise mobility through a new class of business apps; AAPL higher by 1.5%), ARNA +1.6% (issued patent for APD371 by USPTO), CRI +1.3% (Glenview Capital Management disclosed 6.84% stake in 13G), JCI +0.9% (awarded $450 mln Army contract)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: ININ -20.4%, ITI -9.1%, IBKR -2.9%, YHOO -2.3%, PNFP -1.4%, AIR -1.3%, CSX -0.5%, HSY -0.2%

Companies trading lower in after hours in reaction to news: BIOA -11.3% (announced public offering of 2.8 mln shares of common stock), ITI -9.1% (reported resignation of CFO Chuck McBride, names Craig Christensen interim CFO; co continuing to work with auditors to complete FY14 audit), SPBC -4.4% (filed for $50 mln mixed securities shelf offering), BBRY -3.3% (lower following AAPL / IBM partnership to develop business apps), ARCC -2.9% (announced public offering of 11.85 mln shares of its common stock), IPXL -0.9% (announced it received a subpoena from Conneticuit AG regarding its generic product digoxin)

>>> Asian Update

Asian Market Update: China Q2 GDP and June industrial output top estimates; Investors not impressed

***Economic Data*** - (CN) CHINA Q2 REAL GDP Q/Q: 2.0% V 1.8%E; Y/Y: 7.5% V 7.4%E; YTD Y/Y: 7.4% V 7.4%E - (CN) CHINA JUN INDUSTRIAL PRODUCTION Y/Y: 9.2% (5-month high) V 9.0%E; YTD Y/Y: 8.8% V 8.8%E - (CN) CHINA JUN YTD FIXED URBAN ASSETS Y/Y: 17.3% V 17.2%E; first rise in 8 months - (CN) CHINA JUN RETAIL SALES Y/Y: 12.4% V 12.5%E; YTD Y/Y: 12.1% V 12.2%E - (NZ) NEW ZEALAND Q2 CPI Q/Q: 0.3% V 0.4%E; Y/Y: 1.6% V 1.8%E - (KR) SOUTH KOREA JUN UNEMPLOYMENT RATE: 3.6% V 3.7%E - (CL) CHILE CENTRAL BANK CUTS OVERNIGHT RATE TARGET BY 25BPS TO 3.75%, AS EXPECTED

***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 flat, S&P/ASX -0.1%, Kospi -0.1%, Shanghai Composite -0.2%, Hang Seng +0.2%, Sept S&P500 flat at 1,967

***Commodities/Fixed Income/Currencies*** - Aug gold flat at $1,297, Aug crude oil +0.1% at $100.32/brl, Sept Copper flat at $3.25/lb - (NZ) Fonterra Global Dairy Trade auction: Dairy Trade price index: -8.9% from prior auction; Matches biggest decline in nearly 2 years (update) - (US) API PETROLEUM INVENTORIES: CRUDE: -4.8M (3rd consecutive draw; largest draw since June 17th) v -2.5Me, GASOLINE: -1.6M v +1Me, DISTILLATE: +1.3M v +2Me - (CN) China Finance Ministry (MoF) sells 10-yr bonds at 4.1832% - (AU) Australia MoF (AOFM) sells A$500M in 4.25% Bonds; Avg yield: 3.5922%; Bid-to-cover: 3.39x - USD/CNY: (CN) PBoC sets yuan mid point at 6.1535 v 6.1490 prior setting (weakest Yuan setting since Jul 9th; 4th consecutive weaker setting)

- NZD/USD fell about 40pips following lower than expected Q2 CPI and then extended its decline to 3-week lows below $0.87. AUD/USD moved lower by about 25pips despite the higher than expected China GDP and IP figures. USD/JPY is up modestly in afternoon trade, rising about 10pips to ¥101.75.

***Market Focal Points/Key Themes*** - Shares of Intel were up 4.5% in extended session after beating Q2 estimates, raising guidance for the FY14, and announcing a $20B share buyback. Gross margins also showed an impressive expansion to 64.5% from 58.4% y/y. Yahoo missed its numbers and also said it is keeping a bigger stake of Alibaba. CEO Mayer noted that several areas did show strength, particularly Yahoo search which grew sales by 6%. Shares of YHOO were down over 2% afterhours.

- China Q2 GDP and June industrial production topped expectations, however risk-on assets as AUD, SP500 futures, and China stocks are falling modestly post-data. Investors appear to be less inclined to anticipate a more aggressive round of stimulus beyond the "targeted measures." Property sector components of the Fixed Urban Asset investment were also troubling, with sales falling 6.7% YTD, property construction falling 16%, and home sales value down over 9%. NBS also remained downbeat, stating the H1 cooling in the property market represents a reasonable adjustment that could create more pressure on broader economy in near term.

- Rio Tinto and Fortescue posted their quarterly production figures. Rio iron ore output rose 11% y/y and copper rose 50% y/y, as company affirmed FY production outlook for the former and raised that of the latter. Fortescue Q4 output rose to 43.8M tons from 34.3M tons y/y. FMG offered initial iron ore shipment target for FY15 at 155M-160MT vs 124.2MT y/y in FY14.

- South Korea newly appointed Fin Min Choi announced he would take a proactive approach, promising to act preemptively against risks to economy. Korean press reported the govt will invest KRW31T to help spur economy, though the bulk of that would be allocated in FY15. BOK Gov Lee was also increasingly more dovish, noting s growth potential has been falling and smaller companies require help for sustainable growth.

***Equities*** US markets: - INTC: Reports Q2 $0.55 v $0.52e, R$13.8B v $13.6Be; Board authorizes $20B (12.7% of market cap) increase to share repurchase program; +4.5% afterhours - CTAS: Reports Q4 $0.76 (adj for Shred-it transaction) v $0.75e, R$1.16B v $1.17Be; +1.6% afterhours - AAPL: Creates partnership with IBM to Transform Enterprise Mobility; IBM to sell Apple devices with newly created business apps using IBM big data to clients worldwide; +1.6% afterhours - ZIPR: To be acquired by Realogy for $6.75/shr in cash; Total deal value $166M; +112% afterhours

- HSY: Reports prelim Q2 $0.75-0.77 v $0.75e, Rev +4.5%; Guides FY14 EPS at low end of $4.05-4.13 v $4.11e, net sales growth to be around the low end of its long-term 5-7% target; increases prices ~8%; -0.3% afterhours - CSX: Reports Q2 $0.53 v $0.52e, R$3.24B (record high) v $3.25Be; reaffirms FY earnings guidance; -0.5% afterhours - YHOO: Reports Q2 $0.37 v $0.39e, R$1.04B v $1.09Be; amends share repurchase agreement with Alibaba, lowering number of shares to be sold in Alibaba IPO; -2.2% afterhours

Notable movers by sector: - Materials: Iluka Resources ILU.AU +3.4% (Q2 results); Rio Tinto RIO.AU +1.0% (Q2 production results); Fortescue Metals FMG.AU +3.0% (Q4 production results) - Energy: Cofco Biochemical 000930.CN +10.0%, COFCO Property Group 000031.CN +10.0% (China SOE reform trial); Huadian Power International Corp 1071.HK +5.4% (H1 guidance); Huaneng Power International 902.HK +1.4% (H1 power generation results); JX Holdings 5020.JP 1.3% (fueling station expansion plans) - Technology: NHN 035420.KR -3.3% (unit Line files for IPO); Leshi Internet Info & Tech 300104.CN -5.4% (Hearing China to tighten regulations on TV set top boxes); Toshiba 6502.JP +1.1% (Awarded supply order)

WSJ : Is Cash the Answer for Japan’s Pensions?

Is Cash the Answer for Japan’s Pensions?

One pension consultant suggests holding on to cash could be the short-term answer for pension funds wary of government bonds when yields world-wide are at super-low levels. Bloomberg News
As Japanese pension funds search desperately for the right investment to offset falling government bond yields world-wide, one consultant has a suggestion. Why not hold cash for a little while?

Nobuo Ohtsuka, the director and head of investments at consultancy Mercer Japan Ltd. in Tokyo, says he’s told some of his clients recently that stashing cash might not be such a bad strategy for the time being.

Until now, funds have relied on being able to quickly sell Japanese government bonds for cash to satisfy payouts, but their ability to meet payments to retirees could be hurt if yields rose suddenly and the value of those bonds fell, Mr. Ohtsuka said. As Japanese pensions face growing payouts to the retired population over the coming years they will increasingly need a ready supply of cash or easily cashable assets to meet their obligations.

“Of course we understand that with inflation right now, the value of that cash will decline, but it is also important to consider the risk of not being able to meet payouts,” Mr. Ohtsuka said in an interview with The Wall Street Journal.

Another advantage of holding cash is that it can provide pensions with a readily usable war chest of funds should they have a window of opportunity to buy an attractive investment.

“Yields on bonds at home are low. Yields abroad are low, but it wouldn’t be strange to see U.S. Treasury yields go up anytime now. Having cash allows funds to buy the moment a chance presents itself,” he said.

A lot of attention has been focused on how Japan’s pension funds–custodians of the world’s third-largest pool of retirement funds–will reallocate their asset holdings as the Bank of Japan 8301.TO +1.20%’s massive bond program pushes down domestic bond yields.

After the 57% rise in the Nikkei Stock Average in 2013, some market participants said that might tempt private retirement plans to test the waters again. Mr. Ohtsuka disagrees.

“Private pension plans have been burned by stocks many times in the past, so even though everyone is happy that stock prices are up due to Abenomics, they won’t be increasing stocks just because of that,” he said.

Since funds have shunned domestic stocks and yields on domestic bonds are also not attractive, Mr. Ohtsuka said funds are looking to absolute return products including high-yield bonds, bank loans and credit products.

“Furthermore, if there aren’t any good candidates for that diversification, some are holding cash,” he said.

>>> Airbus Defence & Space review targeting year end completion - CFO

Airbus Defence & Space review targeting year end completion - CFO


A strategic review of Airbus [EPA:AIR] Defence & Space is ongoing with expected completion by the end of 2014, according to the division's CFO, Julian Whitehead.

"I feel we've got a lot of work to do. We think we're making quite good progress quickly," said Whitehead in an interview with this news service at the Farnborough Air Show.

The division was established at the start of 2014, following a major restructuring and the rebranding of the European aerospace and defence giant, which used to be known as EADS. The unit is through the bulk of the restructuring and switched to its new structure on 1 July, he said. "We've finally moved everyone into the new organisational structure. We've got the right people in the right jobs," he said.

As part of this restructuring, the Defence & Space division is reducing headcount by 5,300 by the end of 2016. Cutting staff has been no easy task in Europe due to the social processes involved, said Whitehead.

When questioned if the review would result in portfolio optimisation, Whitehead said that "in due course it might mean we want to divest or acquire".

The division will not rush through the strategic review due to the complexities involved. "What we're doing is standing back and looking at all the business areas we've got and how they add to value chains," he said.

Defence & Space has four business lines; military aircraft; space; communications, intelligence & security; and electronics.

Today at Farnborough, Airbus Group announced that it now has more than 3,000 firm orders for its new A320neo aircraft and that AirAsia X had signed a memorandum of understanding to buy 50 A330neo widebody aircraft.

(MergerMarket) Dealmakers see uptick in financial services M&A, but expect few l

Dealmakers see uptick in financial services M&A, but expect few large deals 

Financial services M&A is likely to increase in the second half of this year, but few large mergers are expected, dealmakers said.

Bank deal making will stay active as deal valuations have improved and acquirers’ stocks have gained. Regulatory costs are also putting pressure on smaller banks to look for partners, said Thomas Hayes, a director at DA Davidson & Co. Loan growth is still slow, leading many banks to prefer to grow through M&A, he said.

There were 136 bank deals in 1H14, compared to 115 in 1H13. Deal volume was the highest since 1998 and deal multiples were also up, according to a Raymond James report, from an average of 1.19x book value in 4Q13 to 1.49x in 2Q14.

The largest banks have not been active buyers, although some have sold units or purchased non-bank businesses, said Ralph “Chip” MacDonald, a partner at Jones Day. The deal climate is not expected to get better for large banks, as regulators perceive banking as too concentrated, he said.

70% of deals were for banks with less than USD 400m in assets, while close to 90% of deals were for banks with less than USD 1bn in assets, said Wesley Brown, managing director for KPMG Corporate Finance.

Advisors to regional banks said they are seeing limited activity among larger institutions, though there have been murmurs of conversations. If the long-delayed merger of M&T Bank and Hudson City Bancorp closes and banks cleared by regulators to make acquisitions find targets, deal activity may resume, one said.

There is pent-up demand for deals, as banks that would otherwise have sold stayed on the sidelines from 2009 through 2011, Brown said. Still, deal activity, while now solid, has not exploded. More banks in rural areas are looking to sell, but acquirers prefer higher-growth urban markets, creating something of a mismatch, Brown said.

Banks also have less leverage available to them for deals as trust preferred is no longer available and perpetual preferred stock is difficult to issue for buyers with less than USD 5bn in assets. Regulators are also increasingly cautious about bank rollups, preferring that acquirers take time to digest purchases before returning to dealmaking, Brown said.

“There are many good deals that are not getting done,” said Jeremy Josse, managing director for KPMG Corporate Finance, noting that regulators are exercising caution, adding additional complexity to the deal process. “The market has one foot on the accelerator and one foot on the break,” he said.

The tough regulatory climate, combined with more all-stock deals, means sellers have to put in their time in due diligence, just as buyers do, MacDonald said. They need to ensure that the acquirer has good relations with regulators and have stock currency that’s valuable in the long term, he said.

Antitrust concerns are growing for regulators looking at bank deals in urban areas, because there are few banks building branches and even fewer new charters. There is a first mover advantage for buyers in these markets, as faster-moving banks can potentially box out peers, MacDonald said.

Insurance M&A had been sluggish, but some insurers are selling underperforming units, as they evaluate the fitness of their portfolios. International M&A could be a bright spot, with Japanese firms looking at the US for growth, highlighted by the USD 5.75bn deal announced in June by Japan-based Dai-ichi Life for Alabama-based Protective Life.

The insurance sector will see more M&A over the next six months, an industry banker said. Private equity and insurance companies are holding large amounts of capital they need to deploy, he said. Workers' compensation insurers as well as medical stop loss businesses will see increased activity as insurers show heightened interest in these segments, the banker said.

Asset management M&A is increasing and is ripe for more consolidation. There are too many funds with less than USD 2bn in assets. Some are struggling with returns and will face difficulty raising fresh funds. These issues, combined with stricter regulations, will spark more deals, Josse said.

The financial technology space will see a number of deals in 2H14, a payments industry consultant said. Several segments of financial technology, including point-of-sale, mobile payments, and loyalty, will see consolidation, the consultant said.

Earlier this year, fast growing payments firm Mercury Payments Solutions sold to Vantiv (NYSE:VNTV) for USD 1.65bn, setting a potential benchmark for the sector. Many traditional payments firms, though, are seeing limited growth and may not fetch as high prices.

(BFW) Paulson Supports Potential Sprint/T-Mobile Deal, WSJ S


Paulson Supports Potential Sprint/T-Mobile Deal, WSJ Says
2014-07-15 19:29:26.668 GMT


By Joshua Fineman
     July 15 (Bloomberg) -- John Paulson said competition will
increase if Sprint and T-Mobile can merge, WSJ says, citing
interview with Paulson.
  * Deal will “improve service and lower prices”
  * Expects regulators to be “open-minded” about potential
    deal: Paulson
  * Paulson unlikely to have issue with potential price of deal;
    TMUS price in high $30s to low $40s would be “reasonable”;
    says “big value” is the synergies
  * NOTE: Paulson 4th largest TMUS holder, 3rd largest S holder:
    Bloomberg data


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Joshua Fineman in New York at +1-212-617-8953 or
jfineman@bloomberg.net
To contact the editors responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net
Joshua Fineman

>>> US Close Dow+0,03% S&P-0,19% Nasdaq-0,54%


Closing Market Summary: Stocks Slip Amid Weakness in Small Caps

The major averages posted modest Tuesday losses after being unable to hold their opening gains. Small caps displayed relative weakness throughout the session, which resulted in the Nasdaq Composite (-0.5%) and Russell 2000 (-1.0%) ending behind the S&P 500 (-0.2%) and the Dow Jones Industrial Average (+0.03%).

Equities appeared to be on track for an upbeat session after the financial sector (+0.7%) got out to an early lead thanks to better than expected earnings from Goldman Sachs (GS 169.17, +2.17) and JPMorgan Chase (JPM 58.27, +1.98). The two influential sector components gained 1.3% and 3.5%, respectively, but their strength was not enough to keep the benchmark index out of the red.

The S&P 500 slumped to lows in the late morning after supplemental remarks to Fed Chair Yellen's semiannual testimony on monetary policy singled out biotechnology and social media stocks as groups that have had their valuations stretched. Appropriately, stocks from both arenas responded by pacing the late-morning retreat.

Most notably, the iShares Nasdaq Biotechnology ETF (IBB 252.43, -5.67) lost 2.2%, which put the ETF back near its lowest levels of the month. For its part, the health care sector (-0.9%) was the weakest performing group.

Meanwhile, another countercyclical sector—consumer staples—also ended near the bottom of the leaderboard. The sector lost 0.8% with tobacco names exerting pressure as Lorillard (LO 60.17, -7.05) tumbled 10.5% after agreeing to be acquired by Reynolds American (RAI 58.84, -4.34) for $68.88 per share. The deal announcement was followed by news that Moody's is reviewing ratings of both names for potential downgrades.

Outside of consumer staples and health care, the other two countercyclical sectors fared well. The telecom services sector rose 0.7% and utilities added 0.5%.

Turning back to the cyclical side, financials remained in the green throughout the day, while the industrial sector (+0.1%) crept into positive territory during the afternoon. Transports contributed to the rebound (Dow Jones Transportation Average +0.4%) with JB Hunt (JBHT 76.94, +2.65) leading the pack. The stock rallied 3.6% after reporting in-line results this morning.

Elsewhere, the top-weighted S&P 500 sector—technology (-0.2%)—underperformed intraday, but caught up to the S&P 500 ahead of the close. Social media names lagged, but were able to trim some of their losses. Facebook (FB 67.16, -0.73), Twitter (TWTR 37.88, -0.43), and Yelp (YELP 69.02, -2.09) lost between 1.1% and 2.9%.

Treasuries ended the day little changed after alternating between gains and losses. The 10-yr yield finished the day at 2.55%.

Participation bucked the recent trend with an above-average 716 million shares changing hands at the NYSE.

Economic data included June Retail Sales, June import/export prices, July Empire Manufacturing survey, and the Empire Manufacturing Survey:
  • Retail sales increased 0.2% in June following an upwardly revised 0.5% (from 0.3%) increase in May, while the consensus expected an increase of 0.7% 
    • The June employment report signaled a strong increase in aggregate earnings and motor vehicle sales for the same month exceeded 17 million SAAR for the first time since July 2006. Both of those factors were expected to drive retail sales growth in June, yet failed to provide the oomph needed to accelerate consumer demand 
    • It seems likely that consumers pocketed some of the extra earnings in June and increased their savings rate 
    • Excluding motor vehicles, retail sales increased a 0.4% in June, which was the same growth rate following an upward revision (from 0.1%) in May. The consensus expected these sales to increase 0.6% 
  • Export prices, excluding agriculture, fell 0.3% in June after increasing 0.1% in the prior reading 
  • Excluding oil, import prices declined 0.1%, which followed last month's unchanged reading 
  • The Empire Manufacturing Survey for July registered a reading of 25.6, which was well ahead of the prior month's reading of 19.3. It was also ahead of the consensus estimate, which was pegged at 13.2 
  • Business inventories increased 0.5% in May following an unrevised 0.6% increase in April, while the consensus expected business inventories to increase 0.6% 
    • Inventories for manufacturers (0.8%) and merchant wholesalers (0.5%) were known prior to the release. Only retailer inventories, which increased 0.2% in May after increasing 0.5% in April, were unknown 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while June PPI (consensus 0.2%) will be reported at 8:30 ET. The Net Long-Term TIC Flows report for May will cross the wires at 9:00 ET, while June Industrial Production (consensus 0.4%) and Capacity Utilization (expected 79.2%) will both be announced at 9:15 ET. The busy day of data will also include the 10:00 ET release of the NAHB Housing Market Index for July (consensus 50) and the July Fed Beige Book, which will be released at 14:00 ET.
  • S&P 500 +6.8% YTD 
  • Nasdaq Composite +5.7% YTD 
  • Dow Jones Industrial Average +2.9% YTD 
  • Russell 2000 -0.8% YTD