Category: Stock Market News

Oil prices fell Wednesday to mark the lowest settlement for a front-month futures contract since Aug. 10, according to FactSet data. The broader trend for oil is its “steady slide” in prices, since the Organization of the Petroleum Exporting Countries in late May extended its output-cut agreement through March of next year, said Robbie Fraser, commodity analyst at Schneider Electric. “The primary factor behind that drop continues to be upward revisions to U.S. production expectations, which was once again highlighted” by a 20,000 barrel-per-day increase in the Energy Information Administration’s weekly production estimate, he said. August WTI crude lost 98 cents, or 2.3%, to settle $42.53 a barrel on the New York Mercantile Exchange.

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Cable company Altice USA Inc. increased Wednesday the number of shares it will sell in its initial public offering by 37% to 63.9 million shares, to raise up to $1.98 billion, from 46.6 million shares last month. The increase comes entirely from selling shareholders, who are now selling 51.9 million shares, compared with last month’s plan to sell 34.5 million shares. The company, which acquired Cablevision last June and Suddenlink in December 2015, is still selling about 12.1 million shares in the IPO, which is still expected to price between $27 and $31 a share. The stock will be listed on the New York Stock Exchange under the ticker symbol “ATUS.”

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Gold prices settled higher Wednesday for the first time in three sessions, finding support as the U.S. dollar weakened. Philadelphia Fed President Patrick Harker on Wednesday said he advocated a “pause” on rate hikes while the central bank starts to pare its balance sheet. Prices had ended Tuesday at a five-week low. August gold rose $2.30, or 0.2%, to settle at $1,245.80 an ounce.

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Philadelphia Fed President Patrick Harker on Wednesday said the September meeting could be a good time for the U.S. central bank to begin the process of shrinking its balance sheet. In an interview with the Financial Times, Harker stressed that no final decision had been made and negative economic data would delay the start of the program. Fed officials agreed earlier this month on details to allow a fixed amount of assets to run off the $4.5 trillion balance sheet every month. The initial cap will be set at $10 billion. The Philadelphia Fed president, who is a voting member of the Fed policy committee, said he advocated a “pause” on rate hikes while the central bank starts to pare its balance sheet.

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The SPDR S&P Biotech ETF surged 4% and the SPDR S&P Pharmaceuticals ETF rose 2.3% in midday trade Tuesday after a New York Times report said President Donald Trump has drafted an executive order that would ease industry regulations. Several proposals in the draft come from industry or simply seem to benefit drug companies, theTimes reported, including a study of how drug prices vary by country and reconsidering trade agreements using that information. The move would be a change in tone for the president, who has previously said drug companies are “getting away with murder” and vowed to bring prices down. Still, several of Trump’s previous drug price proposals would likely only be possible through legislative action and not an executive order, the Times article noted. “The limited scope of the Trump discussions is an implicit acknowledgement that only congressional action could solve those issues (say, by rewriting Medicare Part D). Nothing of that scope will be discussed or acted upon in the executive branch,” said EvercoreISI analyst Terry Haines. “Congress would not act on any part of ACA affecting drug prices before 2018 at earliest, and even that is far from likely after the battle over ACA taxes and revenues which is pending in the Senate and is far from over.” The SPDR S&P Biotech ETF has risen 14.9% in the last month, and the SPDR S&P Pharmaceuticals ETF has surged 3.1%, compared with a 0.9% rise in the S&P 500 .

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Shares of Chesapeake Energy Corp. sank 5.4% toward an 11-month low in midday trade Wednesday, after Macquarie Research turned bearish on the oil and gas explorer, citing concerns that the company is ill-equipped to deal with another drop in oil prices. Analyst Paul Grigel downgraded the stock to a rare underperform rating from neutral and slashed his stock price target to $3.50, which is 25% below current levels, from $6.00. Only 5.8% of the U.S. companies covered by Macquarie are rated underperform. Grigel said the lower outlook for crude prices pressures Chesapeake’s fundamentals given the company’s recent efforts to increase its oil exposure over natural gas. “While the company has made strides in repositioning itself, it simply isn’t far enough along to sustainably compete in a lower-for-longer crude world,” Grigel wrote in a research note. Continuous crude oil futures tumbled 1.6% toward a 10 1/2-month low, and have now plunged more than 21% from the February peak. And although the company has been selling assets to pay down its high debt load, Grigel said he is still estimates a “material outspend on high leverage with concerns around liquidity.” The stock has plummeted 34% year to date, while the SPDR Energy Select Sector ETF has shed 15% and the S&P 500 has gained 8.8%.

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Diageo PLC said Wednesday that it has agreed to acquire Casamigos, the tequila brand founded by George Clooney, Rande Gerber and Mike Meldman. The deal values Casamigos at up to $1 billion, with initial consideration of $700 million and an additional $300 million potential based on performance over the next decade. Casamigos shipped 120,000 cases in 2016, primarily in the U.S., Diageo said in a statement. It’s on the path to more than 170,000 cases in 2017. The transaction is expected to close in the second half of this year. Diageo expects the deal to be earnings neutral for the first three years and then become accretive. Diageo’s other brands include Johnnie Walker whiskey, Bulleit bourbon, Ketel One vodka, and Don Julio tequila. Diageo shares are unchanged in Wednesday trading, but up 17.6% for the year so far. The S&P 500 index is up 8.8% for 2017 to date.

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The Argentine peso fell sharply against the U.S. dollar to trade at $16.4225 on Wednesday as investors punished the Latin American currency in disappointment over MSCI’s delay in restoring Argentina to its Emerging Markets Index. The index provider on Tuesday said it would not reclassify Argentina as a developing economy due to concerns about capital controls and foreign exchange restrictions. The decision came as the country prepared to sell $2.4 billion worth of 100-year bonds with a yield of 8.25%. The peso has fallen 3.6% against the greenback this year, according to FactSet.

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Oil prices added to earlier gains Wednesday after data from the U.S. Energy Information Administration showed that domestic crude supplies fell by 2.5 million barrels for the week ended June 16. Analysts surveyed by S&P Global Platts expected a decline of 2 million barrels, while the American Petroleum Institute late Tuesday reported a fall of 2.7 million barrels, according to sources. Gasoline stockpiles also fell by 600,000 barrels, while distillate stockpiles rose by 1.1 million barrels last week, according to the EIA. August crude rose 47 cents, or 1.1%, to $43.98 a barrel on the New York Mercantile Exchange. It traded at $43.77 before the supply data.

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Twitter Inc.’s stock shot up 5.8% in morning trade, lifting the stock above both its widely-watched 50-day and 200-day moving averages in one fell swoop. Volume topped 9 million shares in less than an hour after the open, compared with the full-day average of 15.8 million shares. The company has not released any news. Based on current trajectories, the 50-day MA is on course to cross above the 200-day MA in about a week, a bullish technical event known as a “golden cross.” Many chart watchers view a golden cross as marking the spot that a shorter-term rally transitions into a longer-term uptrend. After the last golden cross on Sept. 6, 2016, the stock soared another 25% before peaking a month later. Twitter’s stock has rallied 9.7% year to date, while the S&P 500 has gained 8.9%.

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