On The Fly: Top Stock Stories For Friday
Stocks began the session in negative territory and remained there throughout the day. Trading volumes were elevated by "quadruple witching," the quarterly event when index futures, index options, stock options, and single stock futures all expire. The event can cause volatility, but today's action was fairly subdued. As the news flow slowed and the volume grew lighter, the market limped into the close.
Oil prices were higher throughout the day and settled with an advance of nearly 4%, but the commodity was still down for the week, as today's advance merely offset yesterday's sharp declined.
Economic Events
In the U.S., housing starts were reported to have dipped 0.3% to 1.164M in May, which was a bit better than forecast. Building permits rose 0.7% to a 1.138M rate last month. Baker Hughes reports that the U.S. rig count is up 10 rigs from last week to 424, with oil rigs up 9 to 337, gas rigs up 1 to 86, and miscellaneous rigs unchanged at 1.
Company News
Shares of Apple (AAPL) slipped 2.3% after reports from Forbes and The Wall Street Journal that said China's Beijing Intellectual Property Office had ordered the company to halt sales of its iPhone 6 and iPhone 6 Plus. Apple confirmed a lower court ruling in the country related to its alleged patent infringement, but said it has appealed the decision and all products are still for sale in the country.
This morning, Viacom (VIA; VIAB) announced updated guidance for the quarter, saying that it now expects per-share earnings well below consensus expectations, due largely to underperformance of the "Teenage Mutant Ninja Turtles" sequel. The disappointing outlook was announced as the power struggle at top of Viacom continues, with Sumner Redstone's National Amusements attempting to oust five of the company's directors, including Viacom CEO Philippe Dauman, and Viacom's lead independent director of the board, Frederic Salerno, filing suit in Delaware's courts to stop the board changes.
Revlon (REV) announced an agreement to acquire Elizabeth Arden (RDEN) for $14 per share in cash, representing an enterprise value for the smaller beauty products maker of approximately $870M. Elizabeth Arden shares jumped 49% following the deal announcement, while Revlon shares gained 6.7%.
Meanwhile, Albemarle (ALB) shares advanced 3.5% after the company agreed to sell a surface-treatment division to BASF (BASFY) for about $3.2B in cash.
In another M&A announcement, Siemens (SIEGY) agreed to merge its wind power business, including wind services, with Gamesa. 59% of the newly formed wind power company will be owned by Siemens, with Gamesa's existing shareholders holding the remaining 41%.
Major Movers
Among the noteworthy gainers was Lumber Liquidators (LL), which advanced 19.3% after a U.S. government agency ended its investigation into the company without issuing a product recall and the company agreed to not sell laminate flooring made in China.
Also higher was Smith & Wesson (SWHC), which gained 8.74% after the company reported stronger than expected results. Research firms Cowen and Craig-Hallum upgraded the shares in the wake of the results.
Additionally, Oracle (ORCL) shares rose 2.66% after the company reported roughly in-line fourth quarter results. The tech company's results were well-received by analysts, with Jefferies and Deutsche Bank among the research firms saying that they were better than feared.
Among the notable losers was Synaptics (SYNA), which dropped 11% after the company announced it will cut 160 employee positions and reduce headcount globally by approximately 9%. Additionally, Vertex Pharmaceuticals (VRTX) dropped 4.07% after the National Institute for Health and Care Excellence of the U.K. said it will not be able to recommend Orkambi, marketed by the company, for treating cystic fibrosis, citing the cost of the drug.
Indexes
The Dow fell 57.94, or 0.33%, to 17,675.16, the Nasdaq lost 44.58, or 0.92%, to 4,800.34, and the S&P 500 declined 6.77, or 0.33%, to 2,071.22.
Disclosure: None.