By Carla Mozee, MarketWatch Halliburton buying Baker Hughes in
$35 billion deal
LONDON (MarketWatch) -- U.S. stock futures declined Monday, with
Wall Street likely to start in the red after Japan -- the world's
third-largest economy -- fell into recession, but shares of Baker
Hughes Inc. look set to shine after the oil-services company agreed
to a buyout.
Futures for the Dow Jones Industrial Average (DJZ4) dropped 38
points, or 0.2%, to 17,566, and those for the S&P 500 index
(SPZ4) lost 6 points, or 0.3%, to 2,032. Nasdaq 100 futures (NDZ4)
declined 8 points, or 0.2%, to 4,214.50.
Weakness set in after official data showed Japan's real gross
domestic product shrank 1.6% in the third quarter, weighed by
companies cutting inventories and subdued capital investment.
Economists surveyed by The Wall Street Journal had on average been
looking for the economy to expand by 2.25%.
Japanese stocks sank after the report, leaving the Nikkei Stock
Average down 3%. The Japanese yen, meanwhile, slid to a seven-year
low against the U.S. dollar (USDJPY), allowing the dollar buy more
than Yen117. The country's Prime Minister Shinzo Abe said he will
decide on whether to move forward with a planned sales-tax increase
following analysis of the situation, according to media reports
Monday. Abe may also call for a snap election to be held next
month.
"The stock market and currency could remain volatile until Mr.
Abe confirms his intentions. There is, of course, the prospect of
further economic stimulus as well," said Richard Troue, head of
investment analysis, at Hargreaves Lansdown, in a Monday note.
A pullback on Wall Street would follow a largely flat end to
trading on Friday, when the S&P 500 (SPX) edged up 1 point and
the Dow industrials (DJI) slipped 0.1%. The Nasdaq Composite (RIXF)
rose 0.2%. The indexes last week marked a fourth week of gains.
Economic data: On Monday's docket, the Empire State index
manufacturing index for November will be released at 8:30 a.m.
Eastern Time, following by the 9:15 a.m. release of October
industrial production figures.
Stocks to watch:Baker Hughes Inc.(BHI) shares bounced up 16%
after Halliburton Co.(HAL) agreed to purchase its rival
oil-services provider in a cash-and-stock deal valued at $34.6
billion. The transaction is valued at $78.62 for each share of
Baker Hughes. Shareholders in Baker Hughes should receive 1.12
Halliburton shares plus $19 in cash for each share they own, and
the deal is expected to close in the second half of 2015.
Pfizer Inc. and Germany's Merck KGaA said they'll work together
to develop a new anti-cancer tumor treatment. Pfizer cut its 2014
per-share earnings view to between $1.40 and $1.49 as Merck will
receive $850 million upfront in the venture.
Botox maker Allergan Inc. (AGN) neared a deal to be acquired by
Actavis PLC(ACT), according to The Wall Street Journal. The WSJ
said the deal will likely be at a premium to Activis's $59 billion
market capitalization, with media reports suggesting it could be
worth up to $65 billion. That would fend off Allergan's months-long
attempt to thwart a hostile $53 billion bid by Valeant
Pharmaceuticals International (VRX).
Other markets: December crude-oil futures (CLZ4) fell nearly 1%,
resuming a run of losses. European stocks followed Japanese stocks
lower, and gold futures (GCX4) were higher at around $1,186 an
ounce.
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