TheChek News Flow

Closing Market Summary: Stocks Slide Amid Disappointing Retail Earnings

The major averages ended the Tuesday in the red after surrendering their gains from Monday. In fact, the Russell 2000, which led the way on Monday, paced today's retreat after being unable to reclaim its 200-day moving average (1117/1118). The small cap index fell 1.5%, while the S&P 500 lost 0.7% with nine sectors ending in the red.

Equity indices began the day with modest losses amid general weakness in most cyclical sectors. Most notably, retailers pressured the discretionary sector (-0.9%) after Dick's Sporting Goods (DKS 43.60, -9.56), Staples (SPLS 11.71, -1.68), TJX (TJX 53.95, -4.45), and Urban Outfitters (URBN 32.98, -3.19) all reported disappointing earnings.

Similar to the four names, Home Depot (HD 77.96, +1.46) also reported below-consensus earnings, but the Dow component was able to stay out of the red as upbeat comments from the management overshadowed the earnings miss. Despite Home Depot's outperformance, the retail space struggled with the SPDR S&P Retail ETF (XRT 81.83, -2.07) falling 2.5%.

Elsewhere among influential sectors, financials (-0.7%) and industrials (-1.3%) lagged, while technology (-0.5%) and health care (-0.6%) outperformed.

Notably, the second-weakest sector of the month—financials—extended its May loss to 1.3%. In all fairness, the economically-sensitive group has been unable to gain any traction since the start of the year as today's loss widened its year-to-date decline to 0.9%.

Also of note, the health care sector was able to keep pace with the S&P 500 even as biotechnology struggled. The iShares Nasdaq Biotechnology ETF (IBB 228.36, -3.14) lost 1.4%, which contributed to the underperformance of the Nasdaq.

All in all, today's early price action was relatively sloppy, which opened the door to a more pronounced retreat in the afternoon. In addition, the overall sense of caution was heightened by continued yen strength as the dollar/yen pair registered its fifth consecutive decline while testing its 200-day moving average (101.19).

In all likelihood, some will attribute today's retreat to comments from Philadelphia Fed President Charles Plosser, who said he felt the economy is on its firmest footing since the recovery began. However, it is worth noting that equities began sliding ahead of Mr. Plosser's comments and that longer-dated Treasuries actually climbed to highs following the remarks. The 10-yr note advanced nine ticks, pressuring its yield four basis points to 2.51%.

Today's participation marked an improvement from yesterday, but remained below average with less than 650 million shares changing hands at the NYSE.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the minutes from the latest FOMC policy meeting will be released at 14:00 ET.

* S&P 500 +1.3% YTD  * Dow Jones Industrial Average -1.2% YTD  * Nasdaq Composite -1.9% YTD * Russell 2000 -5.5% YTD

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AztraZeneca Holder Schafer Cullen Urges Formal Pfizer Talks 2014-05-20 19:57:03.854 GMT

By Brad Skillman May 20 (Bloomberg) -- Schafer Cullen, which says it collectively controls 1.5% of AZN, urges “formal negotiations” with Pfizer to discuss business operating and regulatory details * Comments from e-mailed statement * NOTE: AstraZeneca Gets Backing From Neil Woodford, Axa Criticism {NSN N5VVVU6TTDS8<Go>}

Link to Company News:{AZN LN <Equity> CN <GO>} Link to Company News:{PFE US <Equity> CN <GO>}

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

To contact the editor responsible for this story: Brad Skillman at +1-212-617-2763 or bskillman1@bloomberg.net

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Alstom Not Tied by Breakup Fee at This Stage, CEO Says 2014-05-20 19:00:13.346 GMT

By Francois de Beaupuy and John Simpson May 20 (Bloomberg) -- Patrick Kron says Bouygues did not prompt talks with GE. * Kron says GE endorses Alstom’s offshore wind commitments * Kron speaks at hearing in French National Assembly * NOTE: Earlier, Alstom CEO Says GE Bid Meets French Govt Concerns on Jobs NSN N5VUWJ6VDKVU<GO> Link to Company News:ALO FP <Equity> CN <GO> Link to Company News:GE US <Equity> CN <GO> Link to Company News:SIE GR <Equity> CN <GO>

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

To contact the editor responsible for this story: John Simpson at +1-416-203-5726 or jsimpson12@bloomberg.net

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Merkel Says Problems With Russia to Be Solved With Talks 2014-05-20 17:41:59.545 GMT

By James Kraus and Patrick Donahue May 20 (Bloomberg) -- German Chancellor Angela Merkel rules out war over conflict in Ukraine. * “We will solve our problems with Russia with talks, not through war -- and that’s the kind of progress that’s made Europe possible:” Merkel * Rules out jointly issued debt in euro area * NOTE: Merkel speaks at EU rally in Goerlitz on Polish border

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

To contact the reporters on this story: James Kraus in Geneva at +41-22-317-9232 or jkraus2@bloomberg.net; Patrick Donahue in Goerlitz, Germany at +49-30-70010-6220 or pdonahue1@bloomberg.net To contact the editors responsible for this story: Mariajose Vera at +49-89-244478-803 or mvera1@bloomberg.net James Kraus

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RNS 05/20 18:18 [Delayed] AstraZeneca PLC AZN CLARIFICATION REGARDING PFIZER STATEMENT BN 05/20 17:28 *ASTRAZENECA: PFIZER HAS UNTIL MAY 26 TO MAKE OFFER OR WALK AWAY BN 05/20 17:23 *ASTRAZENECA: PFIZER SAID PROPOSAL IS FINAL WITHOUT PRIOR TALKS BFW 05/20 17:23 *ASTRAZENECA SAYS PFIZER PREVENTED MORE TALKS ON VALUE OF OFFER BFW 05/20 17:23 *ASTRAZENECA INDICATED ACCEPTABLE PRICE, TERMS FOR PFIZER OFFER BN 05/20 17:22 *ASTRAZENECA SAYS PFIZER PREVENTED MORE TALKS ON VALUE OF OFFER BN 05/20 17:21 *ASTRAZENECA HOLDERS ARE STRONGLY ADVISED TO TAKE NO ACTION BN 05/20 17:20 *ASTRAZENECA: CLEAR PFIZER'S FINAL PROPOSAL ISN'T CAPABLE BN 05/20 17:19 *ASTRAZENECA INDICATED ACCEPTABLE PRICE, TERMS FOR PFIZER OFFER BN 05/20 17:18 *ASTRAZENECA PLC AZN CLARIFICATION ON PFIZER STATEMENT

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Astra: ‘Absolutely Clear’ Pfizer Final Proposal Can’t Be Raised 2014-05-20 17:24:53.832 GMT

By Vivek Shankar May 20 (Bloomberg) -- “We have decided that it is necessary to issue a statement to make absolutely clear that Pfizer’s final proposal, which the board rejected, is not capable under the Takeover Panel rules of being increased or even suggested at being increased, privately or publicly, with or without the Board’s approval or recommendation,” AstraZeneca chairman says. Link to Statement:{NSN N5VUPS3HBS3K <GO>} Link to Company News:{AZN LN <Equity> CN <GO>} Link to Company News:{PFE US <Equity> CN <GO>}

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

To contact the editor responsible for this story: Vivek Shankar at +1-415-617-7169 or vshankar3@bloomberg.net

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Alstom CEO Says GE Bid Meets French Govt Concerns on Jobs 2014-05-20 17:21:55.375 GMT

By Jim Silver May 20 (Bloomberg) -- CEO Patrick Kron says process of energy sale is fair and transparent. * Says GE, Alstom have no significant overlaps * Alstom doesn’t have funding power of GE, Siemens, Kron says * Kron speaks at hearing in French National Assembly

Link to Company News:SIE GR <Equity> CN <GO> Link to Company News:GE US <Equity> CN <GO> Link to Company News:ALO FP <Equity> CN <GO>

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

To contact the editor responsible for this story: Jim Silver at +1-212-617-7342 or jsilver@bloomberg.net

AstraZeneca Plc Issues commentary on Pfizer statement Despite AstraZeneca indicating the price and other bases on which it would have been prepared to recommend an offer by Pfizer, Pfizer at its sole election and without prior discussion with AstraZeneca, has in its Final Proposal Announcement stated:

o That its proposal is final; o That it will not make a hostile offer; and o That it will only announce a firm offer with the recommendation of the AstraZeneca Board.

Pfizer: > o Must either announce a recommended firm offer or make a statement that it does not intend to make an offer for AstraZeneca. o Is not permitted (absent the announcement of a higher competing offer by a third party) to announce, even with the consent or recommendation of the Board of AstraZeneca, a firm offer for AstraZeneca unless such offer is on terms no higher than set out in Pfizer's Final Proposal Announcement representing an indicative value of £55.00 per share. o Cannot announce a firm offer without the clear recommendation of the AstraZeneca Board regarding the price and other terms of the offer. o Cannot, even with the consent or recommendation of the Board of AstraZeneca, commit to an increase in price (or suggest that it may do so publicly or privately), even if such increase would take effect after the expiry of the PUSU Deadline.

In the period following the expiry of the PUSU Deadline o Pfizer will not be able to announce an offer for AstraZeneca or take other steps referred to in Rule 2.8 of the Takeover Code with respect to an offer for AstraZeneca, for a period of 6 months, other than in the circumstances set out in Note 2 of that rule. - Accordingly, the only proposal before the Board of AstraZeneca is that set out in the Final Proposal Announcement. There is no possibility of any proposal at a price higher than set out in Pfizer's Final Proposal Announcement representing an indicative value of £55.00 per share being made prior to the PUSU Deadline, even with the consent or recommendation of the Board of AstraZeneca, absent the announcement of a higher competing offer by a third party.

Leif Johansson, Chairman of AstraZeneca said: "We have decided that it is necessary to issue a statement to make absolutely clear that Pfizer's final proposal, which the Board rejected, is not capable under the Takeover Panel rules of being increased or even suggested at being increased, privately or publicly, with or without the Board's approval or recommendation. This restriction that prevents further negotiation on value is a consequence of Pfizer's actions. The Board has made clear in its statement of 19 May 2014 that it is not in the interests of AstraZeneca shareholders to recommend an offer unless the value of the company and its protected delivery to shareholders is properly represented by the amount and terms of the offer."

Fed's Dudley (dove, FOMC voter): Coming rate hike cycle will be slow and gradual; reverse repo tests have gone quite well - comments in NY - Should be a while between the end of the taper and the beginning of rate hikes. - Reiterates timing of initial rate hikes entirely depends on the economy. - New monetary policy tools may be merely transitional, not permanent. - Not ready to say definitively what the future rate policy regime will look like. - After a poor start, economy will return to decent levels of growth. - Headwinds to growth have been abating however growth continues to disappoint. - Inflation should keep drifting higher over the course of 2014, want inflation to average 2% over time. - 2% inflation is not a ceiling

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BN 05/20 16:33 *FRANCE'S ROYAL SPEAKS AT PARLIAMENTARY HEARING BN 05/20 16:32 *FRANCE'S ROYAL SAYS EDF, GDF SHOULD COOPERATE ON SOME PROJECTS BN 05/20 16:32 *FRENCH ENERGY MINISTER WANTS `COMMON PROJECTS' FOR EDF, GDF

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France’s Royal Says EDF, GDF Should Cooperate on Some Projects 2014-05-20 16:38:13.682 GMT

By Tara Patel May 20 (Bloomberg) -- French Energy Minister Segolene Royal said EDF, GDF Suez should work together on big industrial projects like developing techniques to store energy. * Royal tells lawmakers country’s energy mix needs to be better balanced; says she’s won’t oppose nuclear, other forms * NOTE: France preparing energy law

Link to Company News:{EDF FP <Equity> CN <GO>} Link to Company News:{GSZ FP <Equity> CN <GO>}

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

To contact the editor responsible for this story: Tara Patel at +33-1-5365-5058 or tpatel2@bloomberg.net