Stocks slid into the close after a rally this morning that briefly took the Nasdaq above 5,000 for the first time in three weeks.
First, the scoreboard:
- Dow: 18,014.05 -43.60 (-0.24%)
- S&P 500: 2,097.12 -4.94 (-0.24%)
- Nasdaq: 4,999.05 +3.07 (0.06%)
And now, the top stories on Monday:
- Netflix shares rallied by more than 4%, the most on the S&P 500, after UBS upgraded the stock. The analysts upgraded Netflix to “Buy” from “Neutral,” raising their price 12-month price target to $US565 from $US370. They said its international penetration is likely to double by 2020, and it will continue to attract more high-quality shows, spending 100% more on content this year than Amazon Prime.
- Shares of Builders FirstSource surged by more than 66% after it announced plans to acquire ProBuild Holdings for $US1.63 billion in cash. CEO Floyd Sherman said the housing recovery creates the “the ideal time to position Builders FirstSource for its next phase of growth and value creation.” The combined company would have had revenues of around $US6.1 billion in 2014; Builders FirstSource reported 2014 revenue of $US1.6 billion. The deal is expected to close in the second half of the year.
- Consumer spending is on the rebound. The New York Fed’s latest Survey of Consumer Expectations showed that as of March, consumers expect they will increase their spending by 4.5% over the next year. That’s up from the 3.8% increase polled in February. On Tuesday, we’ll get the latest retail sales report, forecast to have risen by 1.1% in March after the disappointing 0.6% decline in February.
- The Federal Reserve may be about to repeat a miscalculated move it made before the financial crisis by keeping interest rates near 0% for much longer. In a note Monday, Wells Fargo’s John Silvia wrote: “We find the delay in Fed action concerning given the incentive effects of searching for higher yield and, in turn, the willingness of market actors to take on additional risk when interest rate expectations are flat […] We find that there are already signs of risk-taking behaviour and attribute at least part of this increase to easy monetary policy that has kept interest rates exceptionally low for a long period of time.”
- RBC Capital Markets upgraded its forecast for housing starts through 2017, as the spring selling season kicks in. RBC’s Robert Wetenhall wrote: “We are raising our forecast for housing starts in 2015, 2016 and 2017 to 1.1 MM (+10%), 1.2 MM (+9%) and 1.25 MM (+4%).” A stronger labour market, low mortgage rates, low rental vacancy rates and increased construction jobs are the reasons why starts will accelerate, Wetenhall wrote.
- A new report from EY Glbla Capital Confidence Barometer indicates that M&A activity is about to explode. Among the key findings, 61% of US companies expect to pursue acquisitions in the next 12 months, versus 56% globally. Moreso, 95% of US companies anticipate more deals than in the prior year, versus just 47% globally.
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