U.S. Indexes Trade Sideways, Zimmer to Buy Biomet for $13.4 Billion

Nichole Harper
24 Apr, 2014
New York City

U.S. market indexes quickly dropped to negative zone after opening higher on the back of better than expected earnings from Apple and Facebook and Aetna. General Motors reported weaker earnings weighed down by recalls.

[R]11:05 AM New York – U.S. market indexes quickly dropped to negative zone after opening higher on the back of better than expected earnings from Apple and Facebook and Aetna. General Motors reported weaker earnings weighed down by recalls.[/R]

U.S. stocks opened sharply higher after Apple and Facebook reported better than expected earnings and General Motors earnings were weighed down by recalls.

S&P 500 index increased 0.95 to 1,875.75 and the Nasdaq Composite Index increased 3.5 to 4,130.41.

Apple Inc stock opened sharply higher after the company boosted its stock buyback by $30 billion and increased its quarterly dividend by 8%.

The company also said it will split its stock 7-to-1 on June 2.

Zimmer Holdings Inc ((ZMH)) agreed to acquire rival maker of artificial hips and knees Biomet Inc for $13.4 billion.

The deal will not require its parent to complete the planned initial public offering by its parent Biomet Group Inc to raise as much as $100 million to pay off debt to leverage buy out companies Blackstone Group and TPG Capital.

After the deal, Zimmer will rank second in the $45 billion prosthetics market and compete head on with Johnson & Johnson and surpass Stryker Corp.

World Markets Review

European markets traded higher and France based Alstom denied media reports that the infrastructure company is in talks to be acquired by the U.S. based General Electric for $13 billion.

In London trading, FTSE 100 index jumped 0.7% or 47.91 to 6,722.65 and in Frankfurt the DAX index gained 0.3% or 33.44 to 9,577.63.

In Paris, CAC 40 index climbed 0.9% or 38.31 to 4,489.39.

Stocks in Tokyo eased in thin trading in the absence of local and international economic news. Investors focused on U.S. earnings and awaited earnings from domestic companies.

The Nikkei 225 Stock Average slipped 141.28 or 0.9% to 14,404.99 and the Topix index fell 8.91 to 1,164.90.

The yen closed down at 102.36 against the U.S. dollar.

Markets in Mumbai were closed on the account of Lok Sabha election. The Parliamentary election are likely to change the central government and results are scheduled to be announced on May 16.

U.S. Stocks in Review

Apple Inc ((APL)) soared 7.4% or $39.11 to $563.77 after the maker of popular gadgets reported better than expected sales and earnings.

Apple sold 43.7 million iPhones in the quarter and net income increased 7% to $10.2 billion and sales advanced 4.7% to $45.6 billion after the company began selling iPhones through the world’s largest wireless carrier, China Mobile Ltd.

Aetna Inc ((AET)) increased 5.5% or $3.66 to $72.60 after the third largest health insurer reported first quarter earnings excluding one-time items of $1.98 a share.

The insurer lifted its annual earnings outlook to a range between $6.35 and $6.55 from its previous outlook of $6.25.

The number of insured patients increased 0.5 million to 22.7 million and revenues in the period jumped 47% to $14 billion after the company acquired Coventry Health Care Inc and net income jumped 36% to $665.5 million.

Facebook Inc ((FB)) declined 0.2% to $61.26 after the operator of largest social networking site reported a surge in sales and earnings.

Revenues in the first quarter increased 72% to $2.5 billion and net income tripled to $642 million or 25 cents a share from $219 million or 9 cents a share.

Facebook claims number of active subscribers increased to 1.28 billion from 1.23 billion at the end of last quarter. The company claims more than 1 billion monthly active mobile users.