Stocks End Higher After Choppy Trading Day
U.S. Market
Stocks gave up early gains this morning, but then bounced back in afternoon trading thanks to strength in the healthcare sector.
Oil prices rose this morning, but then pared those gains, after a handful of reports on U.S. supply and global demand.
At market close the Dow, S&P 500 and Nasdaq were up 0.7%, 0.8% and 0.9% respectively.
Stocks on the Move
Morningstar’s Phil Gorham was “not surprised” that SABMiller (SBMRY) has rejected a bid from Anheuser-Busch Inbev (BUD) for GBP 42.15 per share with a partial stock option. AB InBev had earlier today for the first time gone public with this bid. We regard this as posturing for a higher price by the SABMiller board, and we expect AB InBev to make a higher bid, although we believe the current bid is close to the value-neutral level.
Shares of Yum Brands (YUM) plummeted over 18% today after the firm reported disappointing quarterly results. Morningstar’s R.J. Hottovy views “Yum's third-quarter results as the clearest sign to date that the Chinese consumer is exercising more caution.” Although Yum's updated guidance calls for mid-single-digit fourth-quarter growth, including positive comps at KFC and negative comps at Pizza Hut Casual Dining, management comments regarding "unexpected headwinds" in China cast a shadow on near-term expectations. China comps overshadowed several positives from the quarter (including a 470-basis-point increase in China restaurant margins to 19.6%, positive comps across most markets for KFC, and another stand-out quarter from Taco Bell).
