Flurry of deal news and earning report from Citigroup boost momentum
U.S. stocks rebounded on Monday, 14 July 2014 with the Dow Jones Industrial Average closing above 17,000 as a flurry of deal news and better-than-expected earnings from Citigroup increased demand for equities.
The Dow Jones Industrial Average scaled an intraday record high, but retreated slightly in the afternoon to close 111.61 points, or 0.7%, higher at 17,055.42. The Nasdaq Composite gained 24.93 points, or 0.6%, to 4,440.42. The S&P 500 closed 9.53 points, or 0.5%, higher at 1,977.10.
The technologyrallied on the back of its largest components. Apple, Google, Facebook and IBM gained between 1.0% and 2.4%.
Citigroup's profit topped estimates, even as it reached a $7 billion settlement with the U.S. Justice Department over shoddy mortgage-backed securities. Citigroup shares climbed 3%, lifting shares of other banks such as J.P. Morgan Chase & Co.
The energy sector was boosted by M&A activity, while crude oil ended the session little changed at $100.99/bbl. On the acquisition front, Kodiak Oil & Gas rose 4.8% after agreeing to be acquired by Whiting Petroleum for $6 billion. The energy sector was not the only source of M&A news as industrials and health care also benefitted from deals. Among industrials, URS surged 12.3% after agreeing to be acquired by Aecom for $56.31 per share.
Shire Pharmaceuticals jumped 2.1% on reports it will accept a $53 billion takeover bid from AbbVie. Also of note, Mylan struck a $5.3 billion deal to purchase Abbott's non-US developed markets specialty and branded generics business.
The lack of fresh concerns about the geopolitical front also led to better risk appetite in the market place on Monday. However, four situations remain simmering on low heat on the back burner of the market place: the European Union sovereign debt crisis, the Iraqi civil war, the latest flare-up between Israel and Hamas, and the Russia-Ukraine tensions.
The highlight of the trading week is likely to be testimony on U.S. monetary policy from Federal Reserve Chair Janet Yellen before the U.S. Congress on Tuesday and Wednesday. Also of note, bank and tech earnings will color equity trading throughout the week.
There was no major U.S. economic data due for release on Monday.
Bullion prices registered steep plunge on Monday, 14 July 2014. Gold prices ended the U.S. day session sharply lower on Monday, pressured by heavy profit taking. Gold futures saw their biggest daily drop of 2014 Monday as solid gains for stocks and lackluster physical demand for the precious metal prompted investors to book profits on recent gains.
August gold futures plunged $30.70, or 2.3%, to $1,306.70 an ounce, marking the biggest one-day drop for a nearby futures contract since December. September silver fell more than 54.7 cents, or 2.6%, to $20.91 an ounce. Treasuries ended near their lows with the 10-yr yield up two basis points at 2.54%.
Crude Oil futures settled marginally higher on Monday, 14 July 2014 after three consecutive weekly declines at Nymex. Oil futures tumbled last week on confirmation violence in Iraq has had little impact on the country's oil output, while the Libyan government resumed control of a pair of oil terminals that had been occupied by rebels for several months.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August settled 8 cents, or 0.1%, higher at $100.91 a barrel.
Participation was well below average as less than 600 million shares changed hands at the NYSE.
Tomorrow, the Retail Sales report for June (consensus 0.7%), June import/export prices, and the July Empire Manufacturing survey (consensus 13.2) will be released at 8:30 ET, while the Business Inventories report for May (consensus 0.6%) will cross the wires at 10:00 ET.
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