By Ellie Ismailidou and Wallace Witkowski, MarketWatch
Mattress Firm bounces higher on deal news; oil gains boost
energy shares
U.S. stocks traded moderately lower Monday as Wall Street caught
its breath from Friday's record-setting rally fueled by jobs data,
which helped revive investor confidence in the U.S. economy. A
sharp rise in oil prices boosted energy companies' shares but
didn't manage to nudge the broader stock market higher.
The market looks like a "a reluctant bull," said Thomas Wilson,
senior investment manager at Brinker Capital, referring to Monday's
muted trading after Friday's rally.
The S&P 500 index pulled back from an intraday all-time high
of 2,185.54, reached shortly after the opening bell, and was last
down 3 points, or 0.1%, at 2,180, as a sharp drop in health-care
stocks, outweighed a rise in energy shares, which benefited from a
rally in crude-oil futures .
The Dow Jones Industrial Average was down 26 points, or 0.1%, to
18,518. A 1.8% drop in shares of Merck & Co.(MRK) and a 1.6%
decline in Pfizer Inc.(PFE) shares dragged the blue-chip gauge
down. Oil giants Exxon Mobil Corp.(XOM) and Chevron Corp.(CVX) were
leading the gains.
The Nasdaq Composite Index fell 12 points, or 0.2%, to 5,209,
after logging its first closing record in more than a year
(http://www.marketwatch.com/story/us-stocks-set-for-gains-as-traders-brace-for-upbeat-jobs-report-2016-08-05)
on Friday, following the employment report.
The U.S. economy added 255,000 jobs in July
(http://www.marketwatch.com/story/us-gains-292000-jobs-in-july-2016-08-05).
The reading blasted past analyst expectations, and may nudge the
Federal Reserve toward a near-term interest-rate hike.
For the job-fueled rally to be sustainable, Wilson said the
market needs an improvement in earnings expectations and a clear
indication that the quarterly results show that the so-called
earnings recession has bottomed out, he added.
As of Friday, aggregate earnings for the S&P 500 showed a
decline of 2.3% year-over-year--still better than the 5.2% fall
expected at the beginning of the earnings season, according to
S&P Global Market Intelligence.
But the "bull case" for U.S. stocks at this stage appeared
pretty simple, said Ian Winer, director of equity trading at
Wedbush Securities, namely that "as long as central banks are
flooding the market with liquidity and yields are so low, how can
you not be in U.S. stocks?"
Still, that masks the fundamental problem that U.S. corporations
haven't been spending on their businesses but rather on buying back
their own stocks, Winer said.
Meanwhile, even as economic fundamentals show signs of slow
improvement, an interest-rate hike by the Fed could come later this
year.
"Equity investors [on Friday] appeared comfortable with the idea
of a tightening in the U.S.'s monetary conditions," said Ipek
Ozkardeskaya, senior market analyst with London Capital Group, in a
note.
Read:Sell everything? This stock market dares you
(http://www.marketwatch.com/story/sell-everything-this-stock-market-rally-dares-you-2016-08-06)
Ozkardeskaya said if the U.S. economy continues to improve, the
markets could give their blessing to an additional 25-basis-point
hike by the end of the year. But she says the major challenge for
the Fed is that major central banks around the world are
easing.
"Hence, by simply maintaining the status quo, the Fed's policy
path diverges from the rest of the world," she said.
(http://www.marketwatch.com/story/sell-everything-this-stock-market-rally-dares-you-2016-08-06)There
is no major economic data on the calendar for Monday.
(http://www.marketwatch.com/story/sell-everything-this-stock-market-rally-dares-you-2016-08-06)Oil
futures
(http://www.marketwatch.com/story/oil-futures-steady-near-42-following-volatile-week-2016-08-08)
soared alongside on Monday, with September crude up $1.27 cents, or
3%, to $43.07 a barrel, boosted by a report that the Organization
of the Petroleum Exporting Countries will hold informal talks at an
energy conference in September
(http://www.marketwatch.com/story/opec-plans-informal-production-talks-for-september-2016-08-08).
Stocks to watch: Mattress Firm Holding Corp.(MFRM) soared over
114% after South African furniture retailer Steinhoff International
Holdings NVsaid it planned to buy the company
(http://www.marketwatch.com/story/mattress-firm-bought-by-south-africas-steinhoff-for-24-billion-2016-08-07)
for around $2.4 billion in cash. The bid, worth $64 per share in
cash, represents a huge premium over Mattress Firm's Friday closing
price of $29.74.
Vail Resorts Inc
(http://www.marketwatch.com/story/vail-resorts-to-acquire-whistler-blackcomb-in-c139-billion-deal-2016-08-08).(MTN)
shares gained 7.1% after the company said it has agreed to buy
rival ski-mountain operator Whistler Blackcomb Holdings Inc. (WB.T)
in a C$1.39 billion cash-and-stock deal.
EverBank Financial
(http://www.marketwatch.com/story/everbanks-stock-surges-after-buyout-deal-with-tiaa-2016-08-08)(EVER)
rose 2.8% after the bank said it would be acquired by financial
services company TIAA, which was formerly referred to as TIAA-CREF,
in a deal valued at around $2.5 billion.
Wal-Mart Stores Inc.(WMT) officially announced its acquisition
of Jet.com
(http://www.marketwatch.com/story/wal-mart-announces-3-billion-jetcom-acquisition-2016-08-08)
for $3 billion in cash, a portion of which will be paid over time.
Shares were down 0.7%.
Shares of Delta Air Lines Inc.(DAL) shares slipped 0.2% after
the airline lifted a world-wide grounding of flights
(http://www.marketwatch.com/story/delta-air-lines-grounds-all-flights-worldwide-after-tech-glitch-everywhere-2016-08-08)
due to a computer glitch that left passengers unable to check
in.
Allergan PLC
(http://www.marketwatch.com/story/allergan-beats-profit-expectations-but-sales-miss-2016-08-08)(AGN)
lost 3.2%, after the company beat profit expectations but sales
missed forecasts. Tyson Foods Inc
(http://www.marketwatch.com/story/tyson-shares-jump-after-raised-outlook-2016-08-08).(TSN)
inched lower by 0.1% despite raising its outlook and beat earnings
forecasts. News Corp.(NWS.AU) (the owner of the publisher of this
report, MarketWatch) is expected to report earnings after the
market's close.
Other markets: European stocks
(http://www.marketwatch.com/story/banks-help-push-european-stocks-higher-but-airbus-drops-on-bribery-probe-2016-08-08)
finished fractionally higher. The Nikkei 225 index soared 2.4%,
leading strong gains across Asia, on positive reverberations from
strong U.S. jobs data.
The Shanghai Composite Index rose 0.9%. Data released Monday
showed Chinese exports
(http://www.marketwatch.com/story/chinas-july-exports-slip-worse-than-expected-2016-08-07)
continued to fall in dollar terms in July.
The dollar
(http://www.marketwatch.com/story/dollar-moderately-higher-as-strong-us-jobs-data-linger-2016-08-08)
rose against its major rivals, drawing continued support from last
week's strong U.S. jobs report. Gold futures moved lower, dropping
0.1% to $1,342.50 an ounce on the heels of the sharpest drop in 10
weeks after that jobs data.
--Barbara Kollmeyer in Madrid contributed to this article.
(END) Dow Jones Newswires
August 08, 2016 13:50 ET (17:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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