The S&P 500 ended above the 2k mark for the first time following encouraging economic data on Tuesday. Merger and acquisition news between Burger King and Tim Hortons also helped the benchmarks end higher. The Dow hit a record intraday level of 17,153.80, but shed some of the gains by the end of the day.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI.V) rose 0.2% to close at 17,106.70. The Standard & Poor 500 (S&P 500) increased 0.1% to close at 2,000.02. The tech-laden Nasdaq Composite Index closed at 4,570.64; rising 0.3%. The fear-gauge CBOE Volatility Index (:VIX) rose 0.6% to settle at 11.63. A total of 4.25 billion shares were traded on Tuesday, lower than the monthly average of 5.44 billion. Advancers outpaced declining stocks on the NYSE. For 64% stocks that advanced, 32% declined.
The Conference Board reported that the Consumer Confidence Index rose to 92.4 in August from 90.3 in July. The number was higher than the consensus estimate of 88.6. This was also the highest level since Oct 2007.
Investors were also encouraged by the durable orders report. The U.S. Department of Commerce reported that durable orders in July soared 22.6%, beating the consensus estimate of 10%. The jump in July’s durable orders was mainly boosted by the rising demand for commercial aircraft. According to the report, the new orders for commercial aircraft and parts surged 318% in July.
However, home price data for June was lesser than expected. The S&P/Case Shiller composite index of 20 cities fell 0.2% on seasonally adjusted basis in June, missing the forecast of an unchanged reading. The index for 10 cities also declined 0.1% in June. Housing prices rose just 8.1% year on year in June in 20 cities, failing to meet expectations of 8.4% increase.
Shares of Tim Hortons Inc. (THI) jumped 8.5% after Burger King Worldwide (BKW) agreed on Tuesday to buy the Canadian restaurant chain for about $11.4 billion. This will create one of the biggest fast-food chains in the world. Burger King will move its headquarters from Miami to Canada; making it the latest company seeking to relocate to a lower-tax country. It was also reported that legendary investor Warren Buffett’s Berkshire Hathaway Inc. (BRK.B) is providing $3 billion in preferred equity financing to help the transaction. However, Burger King’s shares dropped 4.3% following the news.
Late on Monday, Amazon.com Inc. (AMZN) announced the acquisition of Twitch Interactive, a video game streaming company, in an all-cash deal for around $970 million. This will be the second biggest acquisition by Amazon. The deal will enhance the company’s online media and content offerings, giving it a competitive edge over other video streaming companies. Shares of Amazon climbed 2.3% on Tuesday.
Amazon’s acquisition announcement boosted the NASDAQ-100 Index yesterday. Key components of the index such as Facebook, Inc. (FB), eBay Inc. (EBAY), Cisco Systems, Inc. (CSCO) and QUALCOMM Incorporated (QCOM) rose 1.3%, 1.4%, 0.5% and 0.6%, respectively.
However, shares of Best Buy Co., Inc. (BBY) declined 6.9% after reporting second-quarter fiscal 2015 revenues of $8,896 million, missing the Zacks Consensus Estimate of $8,968 million. Revenues also declined 4% year over year and comparable store sales declined 2.7%. Management expects comps to decline to low-single digits in the second half of fiscal 2015. Best Buy was the worst performer among the S&P 500 companies on Tuesday.
The Energy Select Sector SPDR (XLE) was the biggest gainer among the S&P 500 sectors. The sector gained 0.5% yesterday. Key energy stocks from the sector such as Halliburton Company (HAL), EOG Resources, Inc. (EOG), Exxon Mobil Corporation (XOM) and Schlumberger Limited (SLB) rose 1.8%, 1.4%, 0.9% and 0.7%, respectively. Out of 10 S&P sectors, 7 sectors registered gains on Tuesday.
Read the analyst report on THI
Read the analyst report on BKW
Read the analyst report on BRK.B
Read the analyst report on AMZN
Read the analyst report on BBY
Read the analyst report on FB
Read the analyst report on EBAY
Read the analyst report on CSCO
Read the analyst report on QCOM
Read the analyst report on HAL
Read the analyst report on EOG
Read the analyst report on XOM
Read the analyst report on SLB
Zacks Investment Research