US shares closed lower on Monday, dragged lower by sharply weaker oil prices, but the Nasdaq made good on forecasts of yet another record high.
The market bellwether S&P 500 closed down 0.4% at 2268, and led by Acuity Brands Inc (NYSE:AYI), down 14.7% to $202.32 after it missed first quarter Street forecasts.
Oil was the main culprit, the US oil benchmark West Texas Intermediate ending down 3.9% at $51.89 on fears that growing US output will weaken the resolve of OPEC and Russia to police an agreed sharp fuel production cull.
After a false start, the Nasdaq Composite managed to scale an intraday record high of 5,541.08 before closing up 0.2% at 5531.
The S&P Midcap 400 ended down 0.7% at 1670 and led by Commercial Metals Company (NYSE:CMC), up 7.9% to $20.81 after reporting downbeat first quarter results.
The S&P Smallcap 600 index closed down 0.9% at 832 and led by Amag Pharmaceuticals (NASDAQ:AMAG), down 35.6% to $23.00. After reaching 12-month share price targets the stock was listed by Zacks Equity Research as one of the strong sell stocks for January 9.
Conversely, a stock that led the small-cap gainers in the S&P 600 was Surgical Care Affiliates (NASDAQ:SCAI) after US health insurer UnitedHealth (NYSE:UNH) said it was buying the outpatient surgical facility operator for $2.3bn.
UnitedHealth’s Optum subsidiary said it would pay $57 a share to acquire Surgical Care Affiliates and combine it with OptumCare, its primary and urgent-care delivery services business. UnitedHealth shares ended down 0.3% at $161.95.
Meanwhile, Coca-Cola (NYSE:KO) shares lost their fizz and closed down 0.8% at $41.40 after Goldman Sachs analysts downgraded shares of Coca-Cola to “sell” while upgrading Dr Pepper Snapple (NYSE:DPS) to “neutral,” saying that the policy winds of 2017 may blow more favourably for US-centric companies than multi-national players. Still, Dr Pepper shares didn’t fare much better, down 0.3% to $90.69.
Early trading
US stocks are set to open the week mixed, with the Dow slipping further away from the 20,000 milestone as oil prices sag, but the Nasdaq tipped for another early record high.
The S&P 500 and Nasdaq Composite both hit record intraday and closing highs on Friday. The drama for the Dow Jones Industrial Average was more pronounced – hitting a record high of 19,999.63 before settling into a 19,963 close, not a record.
US shares opened mixed on Monday, with the S&P 500 and Dow lower while the higher Nasdaq Composite wasn’t able to muster a fresh record high.
The market was not helped by lower oil prices on account of growing fears that strident US output increases will numb the desire of OPEC and Russia to keep to cut backs agreed late last year. The WTI was down 2.5% at $52.62.
But the tech-heavy Nasdaq was up 0.1% at 5,526, having earlier scaled an intraday high of 5,530. But it was unable to conquer the intraday record high from Friday of 5,536.52.
The market bellwether S&P 500 was down 0.3% at 2270 and led by industrial group Acuity Brands Inc (NYSE:AYI), down 17.2% to $196.46 after its missed Wall Street first quarter earnings forecasts.
Its fiscal first-quarter net income was $81.7mln. The Atlanta-based company said it had profit of $1.86 per share. Earnings, adjusted for one-time gains and costs, were $2 per share.
The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $2.18 per share.
On the upside, Global Payments Inc (NYSE:GPN) led the gainers, up 7.4% to $79.98, after announcing results for its fiscal second quarter. The company also boosted its 2017 outlook.
“For calendar 2017, the company expects reported adjusted net revenue of $3.35 to $3.45bn, representing estimated growth of 18% to 21% over our calendar 2016 estimate, or 20% to 24% on a constant currency basis,” it said.
The S&P Midcap 400 was down 0.5% to 1674, and led by Samuel Adams brewer Boston Beer Company (NYSE:SAM) down 7.6% at $158.30 after it was disclosed that insider John C. Geist sold 8,000 shares of the company’s stock in a transaction that occurred last Wednesday. The stock was sold at an average price of $173.54, for a total value of $1,388,320.00.
Meanwhile, Susquehanna analyst, Pablo Zuanic, reiterated his Neutral rating on shares of Boston Beer Company but cut his price target to $165 based on weak scanner data trends.
On the upside, Vca Inc (NASDAQ:WOOF) was up 28.1% to $90.67 after confectionary company Mars Inc said it is buying the pet health care company VCA in a deal valued at around $7.7bn.
Mars will pay $93 for each share of VCA Inc. That's a 31% premium to the Los Angeles company's Friday closing price of $70.77.
The companies said Monday that the deal also includes $1.4bn in debt. Mar’s famous for brands like Wrigley’s and its iconic chocolate bar also has pet food and a pet care division.
The S&P Smallcap 600 was up 0.8% at 833 and led by Amag Pharmaceuticals (NASDAQ:AMAG), down 22.7% to $27.60 on profit-taking as the stock neared its 12-month highs.
The company also announced they have entered into an agreement for exclusive North American rights to develop and commercialize RekyndaTM (bremelanotide), an investigational product designed for on-demand treatment of hypoactive sexual desire disorder (HSDD) in pre-menopausal women, that has successfully completed two Phase 3 trials. Amag also announced its 2017 guidance.
Pre-Open
The US oil benchmark WTI was down 2% at $52.91 as signs of growing US production outweighed optimism that many other producers, including Russia, were sticking to a deal to cut supplies in a bid to bolster the market.
Markets will also await speeches this session by Fed officials which may further fuel the prospect of more, rather than fewer, rate hikes in 2017. Boston Fed’s Eric Rosengren has just begun speaking while Atlanta’s Dennis Lockhart will speak at 1240 ET (1740 GMT).
Apart from banks, much of the bourse won’t be dazzled by higher credit, but the banks, such as Goldman Sachs (NYSE:GS) are a hugely influential part of the tickers such as the Dow.
The S&P 500 market bellwether is expected to open down 0.8% while the Dow could see a sharper sell-off around 0.2%. Only the Nasdaq Composite, which last week struck fresh record highs on Thursday and Friday, looks like hitting a fresh high as soon as markets open.
Understanding your local market is what’s dawned on fast food chain McDonald's (NYSE:MCD) which is selling off most of its China business in a deal worth as much as $2.1bn.
Citic, a massive Chinese financial firm, is taking a majority stake in the McDonald's operations in mainland China and Hong Kong.
US private equity giant The Carlyle Group is also buying into the investment combo, taking a 28% stake. McDonald's will hold the remaining 20% of the business.
McDonalds has secured prime locations in China, including just off Tiananmen Square. But many Chinese tourists are attracted to the sites for its air conditioning and hog tables, reducing footfall.
Tellingly, McDonald's CEO Steve Easterbrook said the fast food company's new partners would bring a better understanding of the Chinese market.
McDonald’s shares were indicated up 0.3% at $121.09.
Shares in Fiat Chrysler (NYSE:FCAU) are higher in Italy and set to shoot higher in the US after the company announced a $1bn investment to expand factories in Ohio and Michigan and create 2,000 new jobs in the US, which will be received as a tonic by US President-elect Donald Trump who is campaigning to get more job creation at home.
Fiat Chrysler shares were up 1.3% at $10.55 pre-market.