Stock Market News for July 15, 2014 - Market News

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Benchmarks settled in the green for the second-straight session, helped by Citigroup's upbeat earnings results and new deals in the healthcare industry. The blue-chip index hit an intra-day record and was able to close above the 17,000 mark. The energy and industrial sectors were also boosted by merger and acquisition activities.

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The Dow Jones Industrial Average (DJI) hit an intraday record high of 17,088.43, but retreated in the afternoon session. However, the Dow gained about 0.7%, or more than 111 points, to close Monday's trading session at 17,055.42. The Standard & Poor 500 (S&P 500) advanced 0.5% to finish at 1,977.10. The tech-laden Nasdaq Composite Index closed at 4,440.42; gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) dropped almost 2.2% to settle at 11.82. Total volume for the day was roughly 4.77 billion shares, lower than this month's average of 5.35 billion. Advancers outpaced declining stocks on the NYSE. For 62% stocks that advanced, 35% declined.

Benchmarks started the week on an upbeat note following Citigroup Inc.'s ( C ) better-than-expected second quarter 2014 results. Citigroup's adjusted earnings per share came in at $1.24, outpacing the Zacks Consensus Estimate of $1.08. Moreover, revenues came in at $19.3 billion for the quarter, above the Zacks Consensus Estimate of $18.8 billion.


The banking heavyweight was able to beat estimates even after the company struck a $7 billion deal with the U.S. Department of Justice, several state attorneys general and the Federal Deposit Insurance Corporation. The settlement will put an end to the charges imposed on the bank for allegedly selling or underwriting residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) to investors without disclosing the associated risks between 2003 and 2008. Shares of the financial behemoth went up 3.0%.

Following Citigroup's impressive performance, shares of other banks such as JPMorgan Chase & Co. ( JPM ) and The Goldman Sachs Group, Inc. ( GS ) gained 0.9% and 1.3%, respectively. JPMorgan Chase and Goldman Sachs Group are expected to report second-quarter earnings results on Tuesday. Last Friday, banking heavyweight Wells Fargo & Company ( WFC ) had kicked off the earnings season for the financial sector with in-line results.

Intel Corporation ( INTC ) and Google Inc. ( GOOGL ) are also  expected to post quarterly earnings results this week. Overall, the second-quarter earnings season is poised to pick up momentum this week, with 60 S&P 500 members reporting results.

According to Thomson Reuters, S&P 500 companies' profits will grow at 6.2% for the second quarter. According to FactSet Research Systems Inc. ( FDS ), earnings for the S&P 500 are expected to rise 4.9% this quarter.

New deals in the health care sector were welcomed by investors. U.S. drug company AbbVie Inc. ( ABBV ) proposed an increased $53 billion takeover bid of Shire plc ( SHPG ). This is AbbVie's fifth attempt to acquire Dublin-based Shire. Shares of Shire jumped 2.1% on reports that it might consider this takeover bid from AbbVie. However, shares of AbbVie dropped 0.2%.

In another development, Mylan, Inc. ( MYL ) declared that the company will buy Abbott Laboratories' ( ABT ) specialty and branded generics pharmaceuticals business outside the U.S. The deal is valued at $5.3 billion. The deal also includes the formation of a new publicly traded company. In the newly-formed entity, Abbott will receive equity ownership of about 21%. Shares of Mylan and Abbott increased 2.1% and 1.3%, respectively.

The energy sector also benefitted from merger and acquisition activity. Shares of Kodiak Oil & Gas Corp. ( KOG ) rose 4.8% after the company agreed to acquire Whiting Petroleum Corp. ( WLL ) for $6 billion. Shares to Whiting Petroleum too surged 7.7%.

The Energy Select Sector SPDR (XLE) gained 0.9%, the highest among the S&P 500 sectors. Key energy stocks such as Exxon Mobil Corporation ( XOM ), Chevron Corporation ( CVX ), Schlumberger Limited ( SLB ), Halliburton Company ( HAL ) and Transocean Ltd. ( RIG ) increased 0.9%, 0.6%, 1.1%, 1.2% and 1.1%, respectively.

The industrials sector too benefitted from a new deal. Shares of URS Corporation ( URS ) soared 12.3% on agreeing to buy AECOM Technology Corporation ( ACM ) for $56.31 a share. Shares of AECOM Technology jumped 10.1%. The Industrial Select Sector SPDR (XLI) advanced 0.6%.


The Technology Select Sector SPDR (XLK) advanced 0.7%, the second highest among the S&P 500 sectors. Shares of Apple Inc. ( AAPL ) gained 1.3% after analysts at Barclays PLC ( BCS ) and Morgan Stanley ( MS ) raised their target price on the stock to $110. Other key stocks from the sector such as Microsoft Corporation ( MSFT ), Verizon Communications Inc. ( VZ ), AT&T, Inc. ( T ) and International Business Machines Corporation ( IBM ) increased 0.1%, 0.4%, 0.3% and 0.9%, respectively. Overall, 8 out of 10 sectors of the S&P 500 ended in the green.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , US Markets

Referenced Stocks: RMBS , XLE , XLI , XLK , JPM



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