The S&P 500 and the Dow closed at all-time highs on Monday, after a brief pullback early in the morning following weaker-than-expected data on the housing market. The dollar strengthened from a four-month low.
First, the scoreboard:
- Dow: 18,320.98, +48.42, (0.26%)
- S&P 500: 2,130.68, +7.95, (0.37%)
- Nasdaq: 5,080.95, +32.66, (0.65%)
And now, the top stories on Monday:
- Homebuilder sentiment fell below expectations in May. The National Association of Homebuilders’ index fell to 54 last month, while economists had expected a rise to 57 from 56 the previous month. “Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home,” wrote NAHB chief economist David Crowe in the release. The index is still above the 50-point benchmark despite the drop.
- Ascena Retail Group announced plans to acquire Ann Taylor for $US47 per share in cash and stock. The deal is worth about $US2 billion. “This powerful transaction joins two strong and highly complementary organisations and management teams and dramatically reinforces our leadership position in women’s specialty apparel retailing,” Ascena CEO David Jaffe wrote. Business Insider’s Ashley Lutz reports that Ascena has the largest count and sales of any women’s clothing retailer. It also dominates the plus-size market.
- Carl Icahn thinks Apple is worth $US240 per share — a $US1.4 trillion valuation. In his latest open letter to CEO Tim Cook, Icahn wrote: “It is our belief that large institutional investors, Wall Street analysts and the news media alike continue to misunderstand Apple and generally fail to value Apple’s net cash separately from its business, fail to adjust earnings to reflect Apple’s real cash tax rate, fail to recognise the growth prospects of Apple entering new categories, and fail to recognise that Apple will maintain pricing and margins, despite significant evidence to the contrary.” Put simply, via Business Insider’s Myles Udland, Icahn thinks everyone else is too stupid to understand Apple’s worth.
- Shares of Eleven Biotherapeutics fell 70% after the company announced failed test results on a treatment for dry eye disease. In a statement, CEO Abbie Celniker said the company was “disappointed” with the outcome of the Phase 3 test, and will continue to develop the drug to treat red eye. The company’s market cap is $US66 million. The stock fell to as low as $US3.50; it’s down 68% from the February 2014-IPO price. Massive sell offs happen regularly in the biotech sector, since investors are often pinning their returns on the success of a single product.
- The shale boom is over and now US drillers have to be more efficient. After an oil and gas industry conference in Houston, Morgan Stanley’s research team wrote that companies must “use the current crisis to resolve many of the inefficiencies that have developed through the good times and put the industry on a stronger footing for the future.” Business Insider’s Shane Ferro notes that “efficiencies,” like “synergies,” is often corporate jargon for job cuts.
- Goldman Sachs hacked its oil forecast for the next five years. According to a note Saturday, the bank’s global energy team expects Brent crude to fall to $US55 per barrel by 2020 (vs $US70 earlier.) It also raised its estimate of the average price of Brent in 2015 to $US58 from $US52, and for West Texas Intermediate crude to $US52 from $US48.