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Dow and S&P 500 edge higher but tech stocks weigh on the Nasdaq

Last updated: 21:18 21 Aug 2017 BST, First published: 16:19 21 Aug 2017 BST

Stock market
  • Tech stocks weigh down the Nasdaq Composite

  • Dow Jones and S&P 500 rack up small gains; S&P/TSX Composite barely changed

  • Tender offers boost Herbalife and Dynegy

Blue-chips stopped the rot on Monday, with the Dow Jones and the S&P 500 eking out small gains.

Soft tech stocks, however, dragged down the Nasdaq Composite 3 points to 6,213.

The 30-share Dow Jones average closed at 21,704, up 29 points, finding forward gear after closing last week with two rough days in succession.

The broader-based S&P 500 closed at 2,428. up 3 points.

Trading volumes were low, however, with traders having half an eye on the central banker's symposium later this week in Jackson Hole.

Sportswear retailer Foot Locker Inc (NYSE:FL) received another shoeing today, tumbling 7.5% to US$31.82, adding to Friday's losses.

Last week the retailer lost more than a quarter of its value after its second quarter earnings per share of 62 US cents were well short of the 90 US cents analysts had expected.

Analysts are concerned that Foot Locker may get squeezed out by suppliers such as Nike Inc (NYSE:NKE), who increasingly are looking to sell directly to consumers. Four brokers downgraded Foot Locker on Monday, with UBS particularly severe, slashing its price target to US$37 from US$70.

In Canada, the S&P/TSX Composite was barely changed, closing at 14,952.

Mid-session: Dow Jones and S&P 500 crawl into positive territory

Stocks found forward gear again in the lunchtime session, despite weak energy and tech shares.

The Dow Jones average was up 17 at 21,692 and the broader-based S&P 500 was 3 points firmer at 2,429 but the tech-heavy Nasdaq Composite was down 4 points at 6,213.

Energy shares such as Exxon Mobile Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) retreated as the price of crude headed south; the former was down 0.4% and the latter off 0.7% as West Texas intermediate fell 1.9% to US$47.59 a barrel on futures markets.

Herbalife Ltd (NYSE:HLF) received a pick-me-up as it announced a plan to buy back US$600mln of share through a Dutch auction at a price no lower than US$60 and no greater than US$68.

Shares in the nutrition company rose US$7.03 to US$68.98 each.

In similar vein, Dynegy Inc (NYSE:DYN) rose 6.1% to US$9.85 after it announced the results of its tender offer to purchase up to US$1.25bn of its outstanding 6.75% senior notes due 2019.

In total, US$974.74mln shares were offered up for purchase.  

Open: Slow start, with catalysts thin on the ground

Blue-chips got the week off to a soft start, with the metaphorical tumble-weed blowing across Wall Street now results season has ended.

There is not much in the way of macroeconomic data to occupy traders either, most of whom probably regard the prospect of today's solar eclipse as a welcome distraction.

The Dow Jones average was down 54 points at 21,620 after half an hour or so of trading, while the broader-based S&P 500 was down 6 at 2,420.

“It’s been a very quiet start to trading on Monday in what is expected to be a slow couple of days, with traders eyeing up the Jackson Hole event later in the week,” opined Craig Erlam, at forex trading platform operator Oanda.

“With both Mario Draghi and Janet Yellen scheduled to appear on Friday, traders are keen to get more insight into the plans of the two central banks, both of which are now pursuing less accommodative monetary policy. The Fed began its tightening cycle almost two years ago now and next month they’re expected to announce plans to start winding down its balance sheet which currently stands at close to $4.5 trillion,” he added.

“The political situation at home is providing another distraction for Donald Trump, who will be wanting to put the events of the last week behind him. There had been a lot of speculation that Trump was about to lose Gary Cohn in the aftermath of the events in Charlottesville and his response to them. Instead it was Steve Bannon that departed, a move that some have touted as being a positive for the President’s agenda. Whether he will be the final casualty for now is yet to be seen but as ever, Trump will remain very much in the spotlight,” Erlam concluded.

With a relatively quite corporate scene, it was a chance for holding company NACCO Industries Inc (NYSE:NC) to grab the limelight, rising 14% to US$75.40 on news that 75-year-old non-executive chairman, president and chief executive officer will be giving up two of those roles – the latter two – when he takes over as executive chairman of Hamilton Beach Brands when it is spun off from NACCO.

Cars maker Fiat Chrysler Automobiles NV (NYSE:FCAU) was quick off the starting grid this morning, rising 5.4% to US$13.24, despite denying it has received a bid approach from China's Great Wall Motor.

Sportswear maker Nike Inc (NYSE:NKE) was friendless after broker Jefferies downgraded the stock to 'hold' from 'buy'. The shares back-pedalled 3.3% to US$53.15.

 

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