Stocks were up, then down, then up again. At one point, the Nasdaq was down by as much as 1.8%. The Dow was down by 51 points.
First, the scoreboard:
- Dow: 16,448.0 (+86.5, +0.5%)
- S&P 500: 1,869.4 (+6.0, +0.3%)
- Nasdaq: 4,074.1, (-1.4, -0.0%)
And now the top stories:
- Today’s action really began when Pfizer confirmed rumors that it was making a bid for AstraZeneca in a deal worth $100 billion. Here’s what Morgan Stanley’s David Risinger said when it was still a rumor: “Strategic rationale. Astra Zeneca would dramatically boost Pfizer’s presence in primary care (incl. respiratory and diabetes), oncology (in particular immuno-oncology candidates), and Emerging Markets, among other areas. It would also offer significant cost rationalization opportunities — Pfizer mgmt has a track record of delivering above-forecast merger cost savings. However, size works against R&D productivity because large entities often stifle innovation.” AstraZeneca surged 12% while Pfizer climbed 4%.
- Bank of America tumbled 6% today after management found an error in how it calculated its regulatory capital. From the BofA statement: “On April 16, the company issued a press release announcing preliminary financial results for the quarter ended March 31, 2014. As part of such release, the company included estimated preliminary Basel 3 capital amounts and ratios as well as Basel 1 capital amounts and ratios for 2013. Subsequent to the press release, the company discovered an incorrect adjustment being applied in the determination of regulatory capital related to the application of the fair value option to certain legacy Merrill Lynch structured notes resulting in an overstatement of its regulatory capital amounts and ratios.”
- “How can the board not come to the conclusion that Bank of America is too complex to manage?” analyst Mike Mayo said to Business Insider. “I think the incident today impacts the controls, capital and credibility… I mean, banking is a business of numbers and getting the numbers right is paramount.”
- The momentum stocks were once again laggards. Chipotle fell 5.5%, First Solar fell 3.8%, Amazon.com fell 2.4%, and Facebook fell 2.3%.
- Pending Home sales climbed 3.4% month-over-month in March, beating expectations for a 1.0% gain. Sales climbed in the Northeast, South and West but fell in the Midwest. Here’s Barclays Michael Gapen on housing: ” Altogether, with the exception of the very weak new home sales report for March, the bulk of housing data points to a slow recovery in the sector following the successive shocks of higher mortgage rates and worsening affordability last year and adverse weather this year. Pending home sales had declined for eight consecutive months, although the pace of decline in January and February clearly moderated, suggesting the series was bottoming.”