U.S. Indexes Advance on Earnings and Fox Takeover Offer for Time Warner

Nichole Harper
16 Jul, 2014
New York City

Stocks on Wall Street traded higher after Time Warner rejected $80 billion offer from 21st Century Fox. Rupert Murdoch said he is prepared to increase his offer and set in motion a long fight to acquire the media giant.

[R]1:10 PM New York – Stocks on Wall Street traded higher after Time Warner rejected $80 billion offer from 21st Century Fox. Rupert Murdoch said he is prepared to increase his offer and set in motion a long fight to acquire the media giant.[/R]

Stocks on Wall Street opened higher after merger and earnings news drove market trading a day after inconclusive comments from the Fed Chair Janet Yellen.

Tollbooth Index, the index that tracks companies with rising bargaining power, inched lower 0.06% or 5.59 to 9,503.81.

Among other popular indexes, S&P 500 index increased 7.76 to 1,981.01 and the Nasdaq Composite Index added 18.43 or 0.4% to 4,434.16.

Yesterday’s comments from the U.S. Federal Reserve Chair Janet Yellen to lawmakers were inconclusive and suggested that the central bank is in no hurry to increase rate in the near future. Yellen also stressed that the U.S. economy still needs monetary policy support.

In addition, China’s official estimate for the second quarter GDP growth was 7.5%, higher than expected 7.4% increase. The news lifted resource stocks.

Merger News

Time Warner Inc ((TWX)) soared 17.2% or $12.01 to $83.14 after the media conglomerate rejected the proposal from Twenty-First Century Fox to acquire all the outstanding shares for a combination of 1.531 of non-voting common shares and $32.42 in cash per share that valued $80 billion.

Gtech SpA climbed 3.7% to €19.12 after the Italy-based online gaming company agreed to buy U.S.-based International Game Technology Inc, casino equipment maker for $6.4 billion in cash, stock and assumed debt.

The deal consists of $4.7 billion in cash and stock as well as $1.7 billion in debt.

U.S. Movers

Bank of America Corp ((BAC)) dropped 2.1% or 33 cents to $15.48 after the bank reported total revenue in the second-quarter ending in June dropped 4.4% to $21.7 billion from a year ago period.

Net income in the quarter plunged 43.1% to $2.03 billion or 19 cents a diluted share compared to $3.57 billion or 32 cents from a year ago. The decline in earnings was driven by rising mortgage litigation costs.

The bank posted a loss of $2.8 billion in its consumer real estate services segment, rise from a loss of $930 million a year earlier due to increase in litigation expenses.

The bank said operating expenses in the quarter jumped to $18.54 billion from $16.1 billion.

The bank agreed to pay $650 million to American International Group to settle the issue of litigation mortgage-securities.

BlackRock, Inc. ((BLK)) slipped 18 cents to $323.56 after the investment management firm said total revenue in the second-quarter ending in June climbed 12% to $2.78 billion from a year ago period.

Net income in the quarter jumped 11% to $808 million or $4.72 a diluted share compared to $729 million or $4.19 from a year ago.

The Charles Schwab Corporation ((SCHW)) fell 26 cents to $27.17 after the discount broker reported net revenue in the second-quarter ending in June advanced 10.4% to $1.48 billion from a year ago.

Net income in the quarter surged 27% to $324 million or 23 cents a diluted share compared to $256 million or 18 cents from a same quarter last year.

Intel Corporation ((INTC)) soared 6.5% or $2.04 to $33.74 after the microprocessor and chipset maker reported revenue in the second-quarter ending in June jumped 8% to $13.8 billion from a year ago. Net income in the quarter climbed 40% to $2.8 billion or 55 cents a diluted share compared to $2 billion or 39 cents from a same quarter last year.

The company forecasted revenue in the third-quarter of $14.4 billion, plus or minus $500 million and revenue growth of 5% for the year.

The board of directors authorized to increase $20 billion to its share repurchase program and projected for share repurchases of about $4 billion in the third quarter.

Yahoo! Inc ((YHOO)) plunged 5% or $1.78 to $33.85 after the search engines service provider stated revenue in the second-quarter ending in June dropped 4% to $1.08 billion from a year ago period.

Net income in the quarter tumbled 19% to $269.7 million or 26 cents a diluted share compared to $331.1 million or 30 cents from a same quarter last year.

European Markets

In London trading, FTSE 100 index gained 0.9% or 62.99 to 6,773.44 and in Frankfurt the DAX index jumped 1.2% or 113.80 to 9,833.21.

In Paris, CAC 40 index climbed 1.2% or 52.28 to 4,357.59.

Italy based Gtech agreed to acquire International Game Technology for $6.4 billion in cash. And, the U.K. based Meggitt surged on takeover bid for about £5 billion.

Husqvarna net climbed 48% to 975 million kronor and Tele2 profit surged 122% to 818 million kronor.

Anglo-Australian mining company Rio Tinto maintained production guidance.

Asian Markets

Retailers were in focus in Tokyo as investors digested a barrage of earnings. Market indexes declined after a two-day rally and China reported better than expected economic growth in the second quarter.

The Nikkei 225 Stock Average fell 15.86 to 15,379.30 and the broader Topix index inched lower 0.09 to 1,273.59.

The yen eased to close at 101.75 against one U.S. dollar.