U.S. stocks finished mixed, as investors weighed relatively upbeat global economic data and continued uncertainty surrounding the tech sector. Treasury yields and the U.S. dollar were little changed, while crude oil moved above $50/barrel and gold was slightly higher. M&A activity was in focus after Discovery Communications agreed to acquire Scripps Networks Interactive for nearly $15 billion.
The Dow Jones Industrial Averageadvanced 61 points (0.3%) to 21,891, the S&P 500 Index was 2 points (0.1%) lower at 2,470, and the NASDAQ Composite declined 27 points (0.4%) to 6,348. In heavy volume, 1.0 billion shares were traded on the NYSE and 1.9 billion shares changed hands on the NASDAQ. WTI crude oil gained $0.46 to $50.17 per barrel and wholesale gasoline was $0.03 higher at $1.68 per gallon. Elsewhere, the Bloomberg gold spot price inched $0.57 higher to $1,270.21 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 92.85.
Discovery Communications Inc. (NASDAQ:DISCA $27) announced an agreement to acquire Scripps Networks Interactive Inc. (NASDAQ:SNI $87) for $90.00 per share in cash and stock, valued at about $14.6 billion. Under the terms of the deal Scripps shareholders will receive $63.00 per share in cash and $27.00 per share in Class C Common shares of Discovery stock. Shares of DISCA saw pressure on the news and as the company reported Q2 earnings that missed forecasts. SNI was modestly higher as rumors of the deal recently boosted its shares and the company lowered its guidance after posting softer-than-expected Q2 revenues.
Dynavax Technologies Corporation (NASDAQ:DVAX) $16) surged over 70% after an advisory committee for the U.S. Food & Drug Administration (FDA) supported the company's safety claim regarding its Hepatitis B vaccine candidate, prompting some analysts to upgrade the stock.
Pending home sales jump, regional manufacturing activity continues to show growth
Pending home sales rose 1.5% month-over-month (m/m) in June, versus the Bloomberg projection of a 1.0% increase, and following the upwardly revised 0.7% drop registered in May. Compared to last year, sales were 0.7% higher. Pending home sales reflect contract signings and are used as a gauge of the pipeline of existing home sales, which dipped slightly more than expected in June.
The Chicago Purchasing Managers Index declined more than expected but remained at a level depicting expansion (above 50), after falling to 58.9 in July from 65.7 in June, which was the highest since May 2014. Expectations called for a decrease to 60.0.
The Dallas Fed Manufacturing Activity Index surprisingly rose further into a level depicting expansion (a reading above zero). The index improved to 16.8 in July, from 15.0 in June, and compared to the expected decline to 13.0.
Today's reports begin a week that will see earnings continue to pour in and the economic calendar likely garnering attention given the recent action in bonds and currencies, while the markets appear a little less certain that another Fed rate hike this year is in the offing. Tomorrow, we will get a look at national manufacturing activity in July with the releases of the ISM Manufacturing Index, projected to dip to 56.5 from 57.8 in June, and the final Markit Manufacturing PMI Index, expected to be unrevised at 53.2 and up from June's 52.0 level. Readings above 50 for both depict expansion. We will also get a look at the health of the consumer and inflation, with the release of June personal income and spending, forecasted to match May's m/m gains of 0.4% and 0.1%, respectively, while the core PCE Index—a Fed favored gauge of inflation—is projected to remain at a 1.4% year-over-year rate and below the Fed's 2.0% target. Tomorrow's monthly U.S. auto sales and construction spending reports are also likely to be in focus.
Treasuries were little changed, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were all flat at 1.35%, 2.29% and 2.90%, respectively. Bond yields have shown some relative signs of life after recent pressure though the U.S. dollar remains hampered. The markets continue to grapple with geopolitical and global monetary policy uncertainties, exacerbated by last week's unchanged Fed monetary policy decision.
Europe mixed, Asia mostly higher following data and amid geopolitical uncertainty
European equities finished mixed in late-day action, with basic materials and oil & gas issues finding some support from upbeat economic data in the region, which followed relatively favorable reports out of Asia. However, the rally in technology issues continued to pause as analysts grapple with valuation concerns as earnings season rolls on. Also, consumer goods stocks were pressured by tobacco companies in the wake of late Friday's FDA announcement that it plans to crackdown on nicotine levels in cigarettes.
The euro and British pound both moved higher in late-day action versus the U.S. dollar to apply some pressure on the markets, ahead of this week's monetary policy decision from the Bank of England, while core eurozone consumer price inflation estimate came in slightly hotter than expected. Bond yields in the region finished mixed. German retail sales rose more than expected in June, while the eurozone unemployment rate unexpectedly dipped. Stocks appeared to shrug off flared-up geopolitical concerns in the wake of another missile test by North Korea late last week.
Stocks in Asia finished mostly to the upside, with the markets digesting some economic data, along with the continued global earnings season. Japanese equities declined, with the yen gaining ground to overshadow an upbeat read on the nation's industrial production, which rebounded more than expected in June. However, stocks traded in mainland China and Hong Kong rallied following upbeat earnings from some key companies in the nation, and as manufacturing and non-manufacturing reports continued to suggest expansion in July, with the latter showing growth in activity out of the key services sector accelerated. Australian securities advanced those traded in India also rose ahead of this week's monetary policy decisions from the two countries.
Meanwhile, South Korean stocks ticked only slightly higher, showing some late-day resiliency in the face of late last week's missile test from North Korea. Amid this backdrop and as South Korean and Indian markets remain near all-time highs.
Markit Manufacturing PMI readings from across the globe will dominate tomorrow's international economic calendar, while other items of note include PPI and trade data from South Korea, auto sales from Japan, employment figures from Germany and GDP from the Eurozone.