Stocks closed higher for the first time in three days. The Federal Reserve will conclude its two-day meeting tomorrow, update its monetary policy statement, and lay out its assessment of the economy.
First, the scoreboard:
- Dow: 17,904.22, +113.05, (0.64%)
- S&P 500: 2,096.34, +11.91, (0.57%)
- Nasdaq: 5,058.76, +28.78, (0.57%)
And now, the top stories on Tuesday:
- Building permits surged to the highest level since January 2007 in May. Permits rose 11.8% to an annualized pace of 1.1 million, also beating economists’ forecasts. But housing starts fell more than expected — 11.1% at an annualized pace of 1.04 million. Economists had forecast that starts fell 4% to an annualized pace of 1.09 million in May. Permits for single-family homes rose 2.6% in the month at a rate of 683,000, and for privately owned units, permits rose 11.8% month-over-month. Permits for multi-family homes rose by 592,000. The surge in permits came mostly from the Northeast region. HSBC economists noted that the impending expiration of a 421-a tax incentive in New York City caused a spike in applications for permits.
- Blackstone Group and Carlyle Group are making a joint bid for NCR worth $US10 billion, according to Reuters. It’s a leveraged buyout, and other firms including Apollo Global Management have their eyes on NCR. Shares of NCR jumped 11%.
- The Atlanta Federal Reserve held its forecast of second quarter Gross Domestic Product steady at 1.9%. Its GDPNow tracker had nailed the contraction in Q1. In the most recent update, the Atlanta Fed noted that the tracker forecast ticked up to 2% after the industrial production data, but fell after today’s housing starts miss.
- Coty shares jumped 18% following a report in the New York Post on Monday that it won an auction for three Procter & Gamble businesses. The deal would reportedly be worth $US12 billion. Coty distributes products for brands including Adidas and Calvin Klein.
- The healthcare merger rumours remind Deutsche Bank analysts of “Game of Thrones.” In a note Tuesday, they recounted recent news, including reports on Monday that Anthem has approached Cigna for a merger. They wrote, “For the first half of 2015, the story with the MCO [Managed Care Organisation] stocks has been about rising anticipation of large scale M&A; [Monday’s] fusillade of media headlines suggest that all of the industry leaders are fully mobilizing their financial arsenals for the developing consolidation showdown.”
- There are two strange things happening in the final 30 minutes of trading. In a note Tuesday, JC O’hara of FBN Securities highlighted a divergence in the bids for S&P 500 stocks and small caps on the Russell 2000. While small-cap stocks have seen an increasing bid year-to-date, large-cap names are seeing less. And, O’Hara earlier highlighted that S&P 500 stocks are have fallen 2% in the final half hour of trading this year.