U.S. Stocks Struggle with Iraq in Backdrop

Nichole Harper
13 Jun, 2014
New York City

Stocks on Wall Street struggled after Iraq violence lifted oil price and supply disruption worries. Priceline agreed to acquire OpenTable for $2.6 billion. Producer prices in May fell unexpectedly.

[R]11:05 AM New York – Stocks on Wall Street struggled after Iraq violence lifted oil price and supply disruption worries. Priceline agreed to acquire OpenTable for $2.6 billion. Producer prices in May fell unexpectedly.[/R]

Stocks on Wall Street struggled on stretched valuations and rising violence in Iraq. Oil price spiked again and producer price index declined unexpectedly in May.

S&P 500 index declined 0.48 to 1,929.49 and the Nasdaq Composite Index gained 5.67 to 4,303.18.

Priceline Group Inc ((PCLN)) agreed to acquire OpenTable Inc. ((OPEN)) for $2.6 billion in cash.

The online travel group offered $103 a share, 46% premium from to OpenTable’s closing price.

More than 15 million diners use OpenTable every month at 31,000 restaurants across the nation according to the company’s web site and increasingly reservations are done using mobile devices.

OpenTable Inc soared 47% to $103.52 and Priceline Group declined 0.8% to 1,216.63.

Other internet stocks also advanced after the deal and the recently listed GrubHub advanced 5.6% or $1.90 to $35.55.

OpenTable listed its stock in May 2009 and the company headquarter is located in San Francisco. The online reservation company is expected to generate $226 million in revenues this year.

OpenTable’s revenues in 2013 increased to $190 million from $160 million in 2012 and earnings rose to $33.38 million from $24 million in the period. Earnings per share jumped to $1.39 in 2013 from $1.03 in 2012.

Wholesale Prices Fall Unexpectedly

Producer Price Index for final demand declined 0.2% in May after rising 0.6% in April, the Labor Department said today in Washington.

The increase in April was the largest in eighteen months and prices declined after rising for four months in a row.

The producer prices declined unexpectedly and the series has been volatile in recent years. The department restructured its PPI series at the beginning of the year to expand to services and construction.

The report on Friday suggests that the price increase are moderating but labor markets are tightening and wage inflation are expected build in the months ahead.

From a year ago month in May, producer prices increased 2% after rising at 2.1% in April.

Core PPI that excluding food and energy from a year ago month in May increased at a pace of 2% from 1.9% in the period through April.

Asian Markets

Bank of Japan kept its monthly stimulus plan and lifted its assessment of foreign economies. The central bank will continue to print money at historic pace of 60 trillion yen to 70 trillion yen.

Governor Haruhiko Kuroda and policy makers are striving to boost inflation above 2%.

The central bank also lifted its view of overseas economies and said in a statement overseas economies are “recovering” and noted uneven but moderate improvements in the domestic economy.

Stocks in Tokyo closed higher and for the week the Nikkei gained 0.1% and the yen retained upward bias and the Bank of Japan kept its monthly stimulus plan.

The Nikkei 225 Stock Average jumped 124.31 or 0.8% to 15,097.84 and the broader Topix index gained 6.22 to 1,243.97. For the week, Nikkei 225 rose 0.1%.

The yen dropped and close at 102.07 against one U.S. dollar.

The Sensex Index declined 348.04 or 1.4% to close at 25,228.17 The CNX Nifty dropped 107.80 to 7,542.10. For the week, Sensex slipped 1.4%.

BHEL commissioned 68 megawatts hydro power plant in Himachal Pradesh. Central Bank of India board approved capital raising by issuing 71 million shares to LIC. Edelweiss Financial Services intends to issue a non-convertible debenture of Rs 200 crore.

U.S. Stocks in Review

Finisar Corp ((FNSR)) plunged 21.6% or $5.43 to $19.82 after the maker of fiber optic communication devices estimated first-quarter earnings below estimated by analysts.

Intel Corporation ((INTC)) increased $1.82 or 6.5% after the largest semiconductor maker lifted its quarterly and annual revenue outlook and said enterprise demand for personal computers is improving. The company also said sales are expected improve for the first time since 2011.

Express, Inc ((EXPR)) soared 20% to $16.31 after Sycamore Partners controlling 9.9% stake in the retailer requested a permission from the company board to perform due diligence to make an offer.