Stocks ended the week higher after the Bank of England took more aggressive monetary easing actions than many expected and the U.S. jobs report surprised to the upside for the second month in a row. The jobs report juiced the U.S. market on Friday, sending the Nasdaq and S&P to close the week at record highs and pushing the Dow back near its all-time best level as well.
MACRO NEWS: In the U.S., the monthly nonfarm payrolls report showed nonfarm payrolls increased by 255,000 jobs in July, which was much higher than the 180,000 job additions that were expected. The unemployment rate remained at 4.9%. The trade deficit widened 8.7% to $44.5B in June, which was a little larger than expected. Markit's manufacturing purchasing managers' index had a final reading of 52.9 for July, matching the July preliminary reading and edging up from 51.3 in June. The ISM manufacturing report for July dipped to 52.6 from a 16-month high of 53.2 in June. Analysts had forecast an ISM reading of 53.0 for July...
In Europe, the Bank of England made a 25 basis point cut in its bank rate to 0.25%, as widely expected. However, the bank surprised some by also announcing a package of measures "designed to provide additional support to growth and to achieve a sustainable return of inflation" to its target. The new easing actions include the purchase of up to GBP 10B of U.K. corporate bonds and an expansion of the asset purchase scheme for government bonds of GBP 60B, taking the total stock of these asset purchases to GBP 435B. Also, the Eurozone manufacturing PMI reading of 52 for July was a tick better than the 51.9 reading that was expected...
In Asia, China's official manufacturing PMI fell to 49.9 for July, versus expectations for it to remain flat with June's 50 reading. The unofficial Caixin manufacturing PMI reading of 50.6 topped expectations and the National Bureau of Statistics' non-manufacturing PMI reading of 53.9 was up a bit from last month. Japanese Prime Minister Shinzo Abe's cabinet approved an Y28T fiscal stimulus package, as expected. Additionally, Australia's central bank cut its benchmark rate by 25 basis points to a record-low 1.5%.
COMPANY NEWS: Shares of Time Warner (TWX) gained nearly 3% on Wednesday after the company reported better than expected quarterly profits and announced it will acquire a stake in streaming TV service Hulu. Time Warner joins Walt Disney (DIS), 21st Century Fox (FOXA), and Comcast (CMCSA) in the joint venture, agreeing to pay $583M for its 10% stake. On Wednesday night, 21st Century Fox announced quarterly earnings per share that topped expectations, but reported revenue below estimates, and its shares dropped more than 5% on the day following the release...
Among other companies that reported on their quarterly results this week, Procter & Gamble (PG), Priceline (PCLN), CVS (CVS), Fitbit (FIT), Etsy (ETSY) and Square (SQ) advanced immediately following their reports, while Pfizer (PFE), Qorvo (QRVO), Kate Spade (KATE), SeaWorld (SEAS), FireEye (FEYE) and Weight Watchers (WTW) declined...
Shares of Bristol-Myers (BMY) dropped sharply on Friday after the company announced that CheckMate-026, a trial investigating the use of Opdivo as monotherapy in patients with previously untreated advanced non-small cell lung cancer, did not meet its primary endpoint of progression-free survival. Rival Merck (MRK), which has a drug in the space therapeutic area, jumped following the news...
Shares of Ford (F) declined over 4% on Tuesday after the automaker reported that its U.S. sales were down 2.8% in July compared to the same month of last year. Ford's total truck sales, including pickups and vans, grew almost 5% in July versus a year ago, though its car sales slipped by nearly over 9%. General Motors (GM), which also reported lower total U.S. auto sales last month than in July of last year, fell more than 4% that day as well, while Fiat Chrysler (FCAU) shares also declined about 4% despite the fact that it reported a small increase in July U.S. sales...
On the M&A front, rooftop solar system provider SolarCity (SCTY) entered into an all-stock deal to merge with Tesla Motors (TSLA), the electric car maker that shares Elon Musk as its chairman of the board. The deal, which has an equity value of $2.6B, will see SolarCity stockholders receive about one-tenth of one Tesla common share per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the recent price of Tesla shares prior to the deal announcement. Shares of both SolarCity and Tesla slid following the confirmation of the agreement. In a separate deal in the solar energy space, Trina Solar (TSL) announced that the company accepted an agreement of its own to go private. An investor consortium led by the company's CEO has struck an all-cash transaction, implying an equity value of the company of approximately $1.1B, under which each American depository share will be cancelled in exchange for the right to receive $11.60 in cash. Verizon (VZ) announced its second multi-billion dollar buyout deal in as many weeks as the wireless communications company continues its makeover. After agreeing last week to buy Yahoo's (YHOO) core internet operations, Verizon announced this Monday that it will buy GPS vehicle-tracking company Fleetmatics (FLTX) in a deal valued at $2.4B.
INDEXES: The Dow gained about 0.6% to close at 18,543.53; the S&P 500 rose about 0.4% to close at 2,182.87; the Nasdaq advanced about 1.1% to close at 5,221.12.
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