Tag: stock market

Gold futures climbed Monday to end at their highest level in almost six weeks. Uncertainty surrounding the pace of the Federal Reserve’s interest-rate increases contributed to the weakness in the U.S. dollar, providing support for gold, which is traded in the greenback. February gold tacked on $11.50, or about 1%, to settle at $1,184.90 an ounce. That was the highest finish since Nov. 29, according to FactSet data.

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The economy should expand at a moderate pace around 2% next year but expectations of higher growth are likely unrealistic, said Atlanta Fed President Dennis Lockhart on Monday. “The economy today is well positioned for moderate growth and steadily improving conditions,” Lockhart said in a speech to the Rotary Club of Atlanta. “It’s less certain that the economy is positioned for a breakout to markedly higher growth on a sustained basis,” he said. The Atlanta Fed president said many investors seem to be anticipating improved growth prospects with the change of administration in Washington. He said he was not factoring fiscal stimulus into his forecast because of the lack of specifics. To get a breakout, policy would have to be designed to offset demographic drags and accelerate productivity, he said. Lockhart is retiring at the end of February after ten years at the helm of the Atlanta regional Fed bank.

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Chip stocks are set up for a big rally in 2017, with the PHLX Semiconductor Index soaring more than 35%, as the industry expected to grow faster than the global economy for the first time since the late 1990s, according to analyst John Pitzer at Credit Suisse. His base-case 12-month target for the chip index (SOX) is 1,000, which is 8.6% above current levels, but he sees upside to 1,250 over the next 12 months, which is 36% above current levels. Pitzer said he expects the SOX to retest its 2000 peak of 1,362 over the next 18-to-24 months, which is 48% above current levels. Despite rising barriers to entry, slowing supply growth, continued industry consolidation and diversifying demand drivers, Pitzer said the sector still trades at a 20% to 25% discount to the S&P 500 , by his calculation. “We continue to argue that semiconductors are the safest and cheapest way to play what we have described as the data growth paradigm in technology,” Pitzer wrote in a note to clients. As part of his industry call, Pitzer upgraded Texas Instruments Inc. to outperform from neutral and Brooks Automation Inc. to neutral from underperform, while downgrading Rudolph Technologies Inc. to neutral from outperform. The SOX, which climbed 1.4% in midday trade, has rocketed 53% over the past 12 months, while the S&P 500 has gained 18%.

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The stocks of Coca-Cola Co. and Procter & Gamble Co. , both components of the Dow Jones Industrial Average , both slumped about 1% in morning trade Monday, after Goldman Sachs analysts turned bearish on the consumer staples giants. Analyst Judy Hong downgraded Coke to sell, after being at neutral for over three years, citing expectations of that 2017 sales will grow slower than the global non-alcoholic beverage market, and the belief the dollar’s strength could restrain earnings growth. She cut her stock price target to $39, which is 5.8% below current levels, from $41. Analyst Jason English downgraded P&G to sell, after also being at neutral for over three years, citing concerns over valuation and that sales growth may have peaked. He cut his stock price target to $77, which is 8.7% below current levels, from $86. English said P&G’s price-to-earnings ratio of 21.6 is near a decade high, and at a 10% premium to the company’s home and personal care peers. P&G’s stock has run up 11% over the past 12 months, while Coke shares have lost 0.4%, the SPDR Consumer Staples Select Sector ETF has tacked on 5.5% and the Dow has surged 22%.

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The U.S. Energy Department on Monday announced that it plans to sell up to 8 million barrels of crude oil from the Strategic Petroleum Reserve. The oil will come from three of the SPR storage sites, with up to 3 million coming from the Bryan Mound site near Freeport, Texas. Bids must be received no later than 2 p.m. Central time on Jan. 17, and contracts will be awarded to by the end of January, the Energy Department said. Prices for West Texas Intermediate crude were already trading sharply lower when the announcement was made. February WTI crude traded at $52.64 a barrel, down $1.35, or 2.5%.

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Stocks opened in negative territory on Monday as investors looked ahead to the start of corporate earnings season. The S&P 500 index slipped 2 points, or 0.1%, to 2,275, while the Dow Jones Industrial Average retreated 37 points, or 0.2%, to 19,925. Meanwhile, the Nasdaq Composite Index gained four points, or 0.1%, to 5,525. Earnings season kicks off later this week with reports from J.P. Morgan Chase and Bank of America Corp. . Shares of Merrimack Pharmaceuticals Inc. shot higher in early trade after the company said Sunday it will sell its oncology assets. McDonald’s Corp. rose after the company signed a deal to sell a controlling stake in its China unit to an investor group led by one of China’s biggest state-owned companies, Citic Ltd.

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President-elect Donald Trump thanked Fiat Chrysler on Monday morning for its decision to invest $1 billion in two existing plants in the U.S. In a tweet, Trump said “it’s finally happening,” citing also Ford’s recent decision to expand operations in Michigan. Trump did not mention either General Motors or Toyota , both of which have said they will continue with plans to produce certain cars in Mexico. The motor vehicle and parts industry added a net 243,000 jobs during the Obama administration, according to Labor Department statistics.

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Shares of Merrimack Pharmaceuticals Inc. soared 34% in active premarket trade Monday, after the company announced a deal to sell some drug products to France-based Ipsen SA for up to $1.03 billion. Premarket volume of 3.2 million shares was already more than the full-day average of 3.1 million shares. Merrimack said late Sunday that it will sell its cancer treatments Onivyde and generic Doxil to Ipsen for $575 million at closing, which is expected by the end of March, and up to $450 million in regulatory approval-based milestone payments. Merrimack could also receive up to $33 million in milestone payments as part of its exclusive license agreement with Shire. Merrimack said it completed its previously-announced pipeline review, and determined that it will focus on its MM-121, MM-141 and MM-310 programs. The stock had tumbled 34% over the past three months through Friday, while the S&P 500 had gained 5.7%.

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Entergy Inc. said it has reached agreement with New York officials to close the two operating units at the Indian Point Energy Center in 2020 to 2021. The nuclear plant, which has operated for more than four decades, is closing as part of a deal under which New York State will drop legal challenges and support renewal of the operating licences for Indian Point, which is located in the village of Buchanan in northern Westchester County. The shutdown will also mark Entergy’s exit from its merchant power business, which has been pressured by the low wholesale energy prices that have come as a result of shale fracking. “Key considerations in our decision to shut down Indian Point ahead of schedule include sustained low current and projected wholesale energy prices that have reduced revenues, as well as increased operating costs,” said Bill Mohl, preisdent of Entergy wholesale commodities. “In addition, we foresee continuing costs for license renewal beyond the more than $200 million and 10 years we have already invested.” Entergy shares were not yet active in premarket trade, but are up 8% in the last 12 months, while the S&P 500 has gained 18%.

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Pet health care services provider VCA Inc. announced Monday a deal to be acquired by snacks and petcare company Mars Inc. in a deal valued at $9.1 billion, including $1.4 billion in debt. Under terms of the deal, Mars will pay $93 for each VCA share outstanding, which represents a 31% premium to Friday’s closing price of $70.77, and gives VCA a market capitalization of about $7.55 billion. The deal is expected to close in the third quarter of 2017. “VCA’s industry-leading partnerships with veterinarians and pet care providers together with its expertise in veterinary services, diagnostics and technology will position Mars to deliver accessible, quality care and continue to create a better world for pets,” said Poul Weihrauch, Mars’ global petcare president. VCA’s stock, which has been halted for news until 8:30 a.m. ET, has soared 34% over the past 12 months, while the S&P 500 has rallied 22%.

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