Ulet Ifansasti/Getty ImagesOil is everywhere. And the price is lower.
Stocks fell to start the week while oil crashed to a fresh six-year low as markets digested the outcome from Friday’s big OPEC meeting.
First, the scoreboard:
- Dow: 17,728, -120, (-0.7%)
- S&P 500: 2,076, -15, (-0.7%)
- Nasdaq: 5,100, -42, (-0.8%)
And now, the top stories on Monday:
- Oil fell about 6% on Monday as markets digested the news late last week that OPEC would maintain its current production levels, likely leaving the oil market oversupplied in the coming months. West Texas Intermediate crude, the US benchmark price, fell to as low as $37.71 a barrel, the lowest in six years and below the previous lows seen during the markets chaos in late August.
- In deal news, Keurig Green Mountain announced it would be acquired by a private equity group led by JAB Group in a deal valued at $13.9 billion, or $92 per share. This price represented a roughly 78% premium to Keurig’s closing price on Friday, though this is still about 40% below the stock’s all-time high hit earlier this year. Shares of Keurig gained about 75% to close at around $90 on Monday.
- In other deal news, hedge fund titan Carl Icahn offered to acquire car parts retailer Pep Boys for $15.50 per share, a $0.50 premium to the deal Pep Boys agreed to with Bridgestone back in October. Icahn’s offer came after a regulatory filing on Friday night indicated that Icahn had amassed a roughly 12% stake in the company, which he believed offered an “excellent synergistic acquisition opportunity” for Icahn’s Auto Plus unit. Shares of Pep Boys gained about 2% to close just above $16 a share on Monday.
- The news was less encouraging for Staples and Office Depot, which got word from the Federal Trade Commission that it would sue to block the proposed combination between the two office supply retailers that would create the largest supply company in the US. Staples shares fell about 12% on the news while Office Depot was off 16%.
- Amid a broad market sell-off, shares of gunmakers Smith & Wesson and Sturm, Ruger were among the winners, gaining about 4% each. Year-to-date, Smith & Wesson has seen its stock double in value while Sturm, Ruger is up about 60%. In a primetime address on Sunday night, US president Barack Obama again indicated that he would work to make it harder for possible mass shooters to gain access to guns.
- Filed again under “Things that have made investors crazy in 2015” is research out of FactSet that shows the steady decline in earnings against the price of the S&P 500, which has remained flat. As Business Insider’s Sam Ro writes, this data is “a reminder that the direction of earnings and expectations for earnings alone reveal very little about where stock prices are headed in the near term.”
- Mario Gabelli seems to still be searching for answers regarding the health of Viacom chairman Sumner Redstone. Last week, Reuters reported that Gabelli called Viacom to inquire about Redstone’s health in response to calls that he was getting from investors, but was rebuffed. In two tweets on Monday, Gabelli simply linked to breakdowns of the voting share ownership for both Viacom and CBS, which showed that Redstone controls the vast majority of the voting power for both companies. Gabelli owns around half of what is available on the free market for both Viacom and CBS. Said another way, Gabelli has about as much voting power as any one shareholder not named Redstone in either company, though this sway is still a fraction of what Redstone has. And while The Wall Street Journal’s Joe Flint reported that Viacom CEO Philippe Dauman criticised recent reports surrounding Redstone’s health, it would appear Gabelli has not yet had his questions answered.