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Stocks down as enthusiasm flattens

Investors calm down and leave trading flat at the start of the week, despite an early high

Stocks fail to rise after promising opening at start of the week
Stocks throw away gains after promising opening at start of the week

US stocks ended flat-to-softer on Monday as investor sentiment cooled.

The S&P 500 index dipped 0.1% to 2,180. Meanwhile, the S&P 400 Mid-Cap index ended flat at 1,562. The S&P 600 Small-Cap Index was down at the close by 0.15% at 745.

An improved oil price of $42.90 per barrel and good jobs numbers couldn’t quite get the market moving into positive territory. The US government’s Friday report of 255,000 jobs created in July also failed to spark major enthusiasm, even though that was good news overall for the American economy.

CDI Corp (NYSE:CDI) was a standout among small-cap stocks, rising nearly 10% to $5.76 through the day’s trading on Monday. The multinational engineering, information technology and staffing company released second quarter financials on Wednesday, August 3.


Mid-session

U.S. markets were flat overall by mid-session on Monday after a positive open for the S&P 500, which briefly shot to an all-time high.

The S&P 500 index at mid-session was at 2,180. Earlier, it marked 2,183, a fresh intraday high. The S&P 400 Mid-Cap index fared only slightly better, up nearly 0.2% to 1,565. Meanwhile, the S&P 600 Small-Cap index was similarly flat, at 746.

Though oil had dipped at the market open, by mid-session it was up nearly 3% at $43.04 per barrel. For now, that rise is helping to keep energy stocks and other commodities in healthy territory.

For instance, Basic Energy Services (NYSE:BAS) was up 6.8% by mid-session, to $0.77. Bonanza Creek Energy Inc. (NYSE:BCEI) was up 10.8% to $0.88.

Some analysts are suggesting that with low refinery margins and lower demand anticipated for September, the markets overall could be headed for a downturn due to lower crude prices.


Open

Wall Street eased lower in early dealings as profit takers held sway after the records seen on Friday.

A strong non-farm payrolls number eased some concerns in the market over the health of the US economy.

The S&P 500 briefly hit an all-time high following the jobs data, but was off a couple of points at 2180.5 as trading got underway.

The Dow Jones Industrial Average eased 18 to 18,524, while Nasdaq was 13 lower at 5,207.

Merck retreated after the big gains last week following the failure of rival Bristol-Myers Squibb’s (NYSE:BMY) immunotherapy drug Opdivo in a lung cancer trial.

That result was seen as seemingly leaving the way clear for Merck’s Keytruda, which passed its trial. Merck (NYSE:MRK) eased 2% to US$62.47 and Bristol Myers fell 5% to US$60.37.

Delta Airlines (NYSE:DAL) was little changed at US$37.73 despite a power cut causing it to suspend flights worldwide and leave hundreds of passengers stranded .

Talk of a production freeze by OPEC gave the oilers a boost with ExxonMobil and Chevron both rising by about 1%.

South Africa group Steinhoff continued its transatlantic bid spree with a bid for Mattress Firm Holding (NASDAQ:MFRM).

Steinhoff is offering US$64 per share or US$2.4bn in cash, sending shares in Mattress up by 114% to US$63.68.


Preview

Anglo-Dutch consumer goods giant Unilever plc (LON:ULVR) will be  one big firm under the spotlight today and City broker Numis rates the 'Dove' soap and marmite maker  a 'hold' targeting 3,660p.

That’s a nice mark-up on the current 3,509p share price.

The chief financial officer is holding a sell-side briefing on Tuesday to discuss any issues of concern/interest after the recent H1 results.

Charles Pick, analyst, says topics likely to be discussed include the agreed Dollar Shave Club purchase (where the price is a rumoured to be $1bn) and new initiatives (net revenue management, new functional models and zero based budgeting) that are due to save more than €1bn per year from 2018.

The deal to buy online-subscription mens grooming firm Dollar Shave emerged late last month.

In 2015, DSC reportedly had turnover of US$152 million and is on track to beat US$200 million in turnover in 2016.

Last month, Unilever forecast no let-up in tough markets, however, as it reported higher first-half sales.

Underlying sales rose 4.7%, which the group said was ahead of its markets, with volumes up 2.2%.

In the second quarter, group underlying sales rose 4.7% with volumes up 1.8%.

Meanwhile, purified cannabinoids biotech company GW Pharmaceuticals reports quarterly numbers.

It surprised Numis with positive Phase 3 headline results for Epidiolex for the treatment of Dravet back in March and Lennox-Gastaut Syndromes in June, as it expected both these trials to fail.

“We now await further data from the trials, particularly around the drug-drug interactions with Clobazam and details of GW’s subsequent interactions with the US FDA [Food & Drug Administration] that are expected to inform the ongoing Phase 3 Dravet syndrome study,” the broker said.

“The second Phase 3 trial in Lennox-Gastaut is expected to report in Q3, and we await updates from several of GW’s competitors in the orphan epilepsy space in the coming weeks with Zogenix and SAGE also reporting on the 9th August,” it added.

Significant announcements expected

 

Interims: GW Pharmaceuticals PLC (LON:GWP), Legal & General Group PLC (LON:LGEN), Quarto Group Inc (LON:QRT), Regus PLC (LON:RGU), SIG PLC (LON:SHI), Standard Life PLC (LON:SL.), Worldpay Group PLC (LON:WPG).

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