S&P 500 and Indexes Lack Direction on Merger Monday

Nichole Harper
01 Jun, 2015
New York City

Market indexes reversed early decline on Merger Monday. Intel finalized its deal to acquire Altera for $17 billion in an all cash transaction. U.S. consumers in April used savings from cheaper gas prices to pay down debt and not increase spending.

[R]1:10 PM – Market indexes reversed early decline on Merger Monday. Intel finalized its deal to acquire Altera for $17 billion in an all cash transaction. U.S. consumers in April used savings from cheaper gas prices to pay down debt and not increase spending.[/R]

Market indexes rebounded from morning slump on merger Monday and Intel and Altera consummated deal in the works for months.

Intel, the largest maker pf integrated chips agreed to acquire programmable chips maker Altera for $17 billion in cash.

The deal was so crucial to Intel, that the company will use up all its cash of $14 billion and raise additional $3 billion in debt to pay for this transaction.

As more appliances have chips including wearable devices and select category of apparel and vehicles, companies are looking to replace current kind of chips with programmable chips made by Altera and others.

Intel based its deal on 7% increase in earnings after the deal and also looked for new markets developed by Internet of Things.

In April, personal income jumped 0.4% and disposable personal income increased 0.4%. Personal consumption expenditure fell less than 0.1% in the month, the Department of Commerce reported.

In a separate report the department said construction spending in April climbed 2.2% at annual rate of $1,006.1 billion from the revised March estimate of $984 billion and jumped 4.8% from a year ago spending of $960.3 billion.

On Wall Street, Tollbooth Strategy Index increased 0.3% or 28.48 to 10,724.70.

S&P 500 index gained 0.3% or 7.19 to 2,114.54 and the Nasdaq Composite Index rose 0.4% or 20.99 to 5,090.92.

Crude oil in New York fell 57 cents to $59.73 a barrel and gold jumped $4.10 to $1,193.90 an ounce.

U.S. Movers

Dollar Tree, Inc ((DLTR)) jumped 1.6% or $1.23 to $76.22 after the fixed price stores operator announced that it will sell 330 Family Dollar stores, Inc to the private equity firm Sycamore Partners, to get antitrust approval for its $8.5 billion takeover of Family Dollar.

The transaction is anticipated to be finalized in July.

General Electric Company ((GE)) fell 12 cents to $27.15 after the Wall Street Journal reported that the diversified conglomerate received offers for its US-based commercial lending unit valued at $40 billion.

GE said it will sell GE Capital Fleet Services business valued at $9 billion and both transactions are expected to close by the end of this month.

Intel Corporation ((INTC)) slumped 1.4% or 48 cents to $33.99 after the semiconductor processors and chips maker agreed to acquire smaller chip maker Altera Corporation for $54 a share in an all-cash transaction valued of about $16.7 billion.

Altera Corporation stock climbed 6% to $51.80.

European Markets

In London trading, FTSE 100 index fell 0.3% or 20.97 to 6,963.53 and in Frankfurt the DAX index rose 0.2% or 19.06 to 11,432.88.

In Paris, CAC 40 index gained 0.5% or 27.89 to 5,035.78.

British American Tobacco Plc rose 0.3% to 3,617 pence after the U.K.-based tobacco products maker agreed to acquire cigarette manufacturer TDR d.o.o. and other tobacco and retail assets from Croatia-based Adris Grupa d.d. for €550 million to expand its business in Croatia, Bosnia and Serbia.

The transaction is expected to close in October.

Petroleo Brasileiro Petrobras SA jumped 2.1% to 12.59 Brazilian real after the Brazil-based integrated oil and gas producer intends to sell some of its assets in the Gulf of Mexico to raise $8 billion, reported local Brazilian newspaper, Folha de S. Paulo.

The divestment is a part of planed assets sale worth $13.7 billion by the end of this year.

Playtech Plc fell 0.4% to 827 pence after the Isle of Man-based online gaming software supplier agreed to acquire retail forex trading company Plus500 for about £459.6 million or $703.52 million in cash to strengthen the position in online trading platform business.

Under the terms, shareholders of Plus500 will receive 400 pence in cash per share.

Asian Markets

Stocks in Japan closed higher as Nikkei advanced in the longest rally since February 1998. Market indexes in Shanghai soared 4.7% and market indexes have soared 50% in the year so far. Fujifilm and Fanuc announced shareholder friendly moves.

Nikkei average in Tokyo turned positive in the early afternoon and extended rally to the twelve days, the longest rally in eighteen years.

The Nikkei 225 Stock Average edged up 6.72 to 20,569.87 and the broader Topix index rose 4.91 to 1,678.56.

The yen closed at 124.18 against a dollar, a low not seen since 2007.

Fanuc Corp gained 0.4% to 27,650 yen after the factory automation machinery maker reported it will retire more than 33.56 million treasury shares representing 14% of shares issued worth about 920 billion yen or $7.41 billion up to June 10.

In April, Fanuc said it will return 80% of its profit back to shareholders.

ITO EN, LTD jumped 2.1% to 2,746 yen after the tea and drinks maker reported net sales in the year ending in April slipped 1.6% to 430.54 billion yen form 437.76 billion yen in a year ago period.

Net income in the year tumbled 39.7% to 7.29 billion yen compared to 12.10 billion yen and diluted earnings per share declined to 56.46 yen from 95.49 yen in the same period a year ago.

The company forecasted net sales in the first-half ending in October to jump 6.7% to 249.50 billion yen and net income to surge 25.6% to 5.50 billion yen.

The drinks maker said estimated net sales for the year to climb 6.8% to 460 billion yen and net profit to soar 19.3% to 8.70 billion yen.

Market indexes on Dalal Street closed slightly higher ahead of interest rate decision by the Reserve Bank.

Rate sensitive stocks traded higher in Mumbai trading ahead of Reserve Bank of India policy meeting tomorrow.

Rupee strengthened 11 paisa to 63.70 against one U.S. dollar.

The Sensex Index rose 20.55 to close at 27,848.99. The CNX Nifty slid 0.25 to 8,433.40.

Larsen & Toubro Limited jumped 2.7% to ₹1,701 after the engineering infrastructure maker said net in the fourth-quarter plunged 27.1% to ₹2,070 crore.

Gross revenues in the quarter increased 3.8% to ₹28,275 crore.

The company said it received new orders worth ₹1,099 in the month of May.

Maruti Suzuki India Limited gained 2.6% to ₹3,885 after the auto maker said total sales in May soared 13.8% to 114,825 units compared to 100,925 in the same period a year ago.

The domestic sales in the month jumped 13% to 102,359 units compared to 90,560 in the same period a year ago and export sales climbed 20% to 12,433 units compared to in the same period last year.