Trading Week Starts Off Incredibly Strong
A plethora of multi-billion dollar M&A deals on Monday was enough to jolt the markets higher.
Leading the charge was AT&T (NYSE: T) offer to acquire Time Warner (NYSE: TWX) for $107.50 per share in a transaction which values the media empire at more than $80 billion. Other notable deals include Rockwell Collins (NYSE: COL) $8 billion acquisition of B/E Aerospace (NASDAQ: BEAV) and China-based HNA Group acquiring a 25 percent stake in Hilton Worldwide (NYSE: HOT) for $6.5 billion.
Last week’s theme of “follow the price of oil” failed to play out on Monday as the commodity dipped lower by 0.43 percent to settle the day at $50.63. The price of oil moved lower after the government of Iraq said it wants to be exempt from an OPEC agreement to lower or freeze oil outputs.
Iraq argued that it needs the necessary capital from oil sales to combat Islamic State terrorists.
The Dow Jones Industrial Average gained 0.43 percent or 77.32 points to close the day at 18,223.03. The S&P 500 index gained 0.47 percent or 10.17 points to close at 2,151.33 while the Nasdaq index was the top performer having gained 1.00 percent or 52.43 points to close at 5,309.83.
Technology stocks performed the best on Monday as investor appetite for mega-cap names was evident. Amazon.com (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) both gained more than two percent, Alphabet (NASDAQ: GOOG) gained 1.72 percent and Apple (NASDAQ: AAPL) gained 0.90 percent.
Energy stocks were lower on Monday, led by Chevron (NYSE: CVX) (-0.63 percent) and Schlumberger (NYSE: SLB) (down 0.25 percent). Several small-to-mid-cap size energy names saw notable declines on Monday, including Hornbeck Offshore (NYSE: HOS) (-9.81 percent), San Juan Basin Royalty (NYSE: SJT) (-8.02 percent) and Cloud Peak Energy (NYSE: CLD) (-7.98 percent).
Telecommunication stocks erased some of the declines seen over the past few days, led by T-Mobile (NASDAQ: TMUS) which hit a new 52-week high of $51.35 and Sprint gained 5.65 percent to close at $6.92. It is possible that many AT&T investors sold the name out of concerns that its approximate five percent dividend yield will be reviewed as part of its merger process with Time Warner so telecom investors searched for yield or growth elsewhere.
Looking ahead to Tuesday, Apple will report its quarterly results – an event that always attracts the complete attention of Wall Street.