After making new highs early this week, stocks trended and closed lower for a second straight day. On Thursday, we finally got promising data on the US consumer, but there’s still no agreement on Greece.
First, the scoreboard:
- Dow: 17,925.53, -40.54, (-0.23%)
- S&P 500: 2,106.17, -2.41, (-0.11%)
- Nasdaq: 5,118.75, -3.67, (-0.07%)
And now, the top stories on Thursday:
- The US consumer is back. Personal spending rose 0.9% in May, more than expected, and the most since August 2009. Personal income rose 0.5%, in line with forecasts and equal to last month’s revised reading of a 0.5% increase in income. “No one should be worried about the economy based on this data-set,” wrote Chris Rupkey at Bank of Tokyo-Mitsubishi in a note. “No one. Spending on everything durable goods, non-durable goods, services, all three categories adding a lot to the real dollars spent on consumption.” Weak consumption baffled economists in the first quarter, especially because they purportedly saved so much money from lower gas prices.
- Personal consumption expenditures rose 0.1% month-over-month and 1.2% year-over-year on a “core” basis excluding food and gas. Both prints which measure inflation beat estimates.
- There’s still no deal on Greece. Talks between prime minister Alexis Tsipras and euro area finance ministers continued Thursday morning after late-night negotiations. The European Union leaders meet at a summit on Friday.
- Healthcare stocks surged after the Supreme Court upheld a key provision of the Affordable Care Act in a 6-3 ruling. Shares of companies including Universal Health, HCA Holdings, and Tenet Healthcare jumped more than 5%. The decision hands the Obama administration a landmark victory, and centered around whether the federal government can subsidise low-income Americans for insurance.
- Rare-earth miner Molycorp is filing for bankruptcy. The company announced Thursday that it will file for Chapter 11 together with its North American subsidiaries. It had been the poster child for a fail proof investment back in 2011; rare-earth minerals were difficult to mine, and had vast uses in consumer products. But the company ran on an operating loss in excess of $US350 million during the last 3 years.
- Shares of Humana jumped more than 8% after Bloomberg reported that it is close to a sale to Aetna, possibly as soon as this weekend. Talks picked up over the weekend on news that Aetna and Cigna were also in negotiations for a deal. The five biggest healthcare insurers are in a fierce battle for consolidation to cut costs and be more competitive.
- Kroger announced a 2-for-1 stock split, a $US500 million buyback program, and a 13.5% hike in dividends. In a statement Thursday, CEO Rodney McMullen said, “today’s actions reflect our Board of Directors’ confidence in Kroger’s long-term performance and ability to deliver growth consistently to our investors. The stock split will increase the accessibility of our shares and liquidity in the trading of our shares.”
- Citi downgraded Netflix but is still “positive on the long-term growth outlook.” In a note, the firm cut their rating to “Neutral” from “Buy,” writing that the stock is now only 6% below its $US722 price target. On Tuesday, Netflix announced a 7-for-1 stock split.