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Benchmarks traded mostly in the negative zone before closing Monday’s trading session little changed as investors took a breather. The S&P 500 and the Dow snapped a six-day rally and closed with minute losses. The Nasdaq managed to move up by less than a point. New deals between Wisconsin Energy and Integrys Energy, and Oracle and Micros Systems were welcomed by investors. Meanwhile, General Electric’s purchase of Alstom’s energy assets had a negative impact on the industrial sector. The day’s positive economic data on existing home sales failed to drive benchmarks higher. 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) dropped almost 0.1% to close at 16,937.26. The Standard & Poor 500 (S&P 500) dropped a meager 0.01% to finish at 16,962.61. The tech-laden Nasdaq Composite Index gained a meager 0.01% and closed Monday’s session at 4,368.68. The fear-gauge CBOE Volatility Index (VIX) went up 1.2% to settle at 10.98. Total volume for the day was roughly 5.07 billion shares, lower than this month’s average of 5.63 billion. Decliners beat the advancing stocks on the NYSE. For 49% stocks that declined, 47% advanced.
The day witnessed a lot of activity on the mergers and acquisitions front. Wisconsin Energy Corp. (NYSE:WEC) agreed to buy Integrys Energy Group, Inc. (NYSE:TEG) for $5.71 billion in cash and stock. Including debt, the deal is valued at $9.1 billion. Integrys shareholders will receive $71.47 per share, 74% of which will be coming from stock and the remaining from shares of Wisconsin Energy. Shares of Integrys Energy surged 12.1%, making it the S&P 500's biggest percentage gainer. However, shares of Wisconsin Energy declined 3.5%.
In another deal, Oracle Corporation (NYSE:ORCL) agreed to acquire MICROS Systems, Inc. (NASDAQ:MCRS) for $4.6 billion in cash. Including items such as options, the deal is valued at about $5.3 billion. Oracle agreed to offer $68 per share, a 3.4% premium to MICROS closing price of $65.77 on Friday. The deal will turn out to be Oracle’s biggest acquisition since 2010. Shares of both Oracle and MICROS Systems increased 0.7% and 3.4%, respectively.
Separately, after initial opposition from the French government, General Electric Company (NYSE:GE) has been given the green signal to acquire Alstom SA’s energy assets. It is estimated that General Electric will buy Alstom’s gas-turbine operations for $17 billion. To facilitate the deal, the French government decided to purchase a stake of about 20% of Alstom shares at a future date from Alstom's leading shareholder, Bouygues. General Electric’s shares slipped 1.1%.
Key stocks from the industrial sector such as United Technologies Corp. (NYSE:UTX), Union Pacific Corporation (NYSE:UNP), The Boeing Company (NYSE:BA) and 3M Company (NYSE:MMM) dropped 0.7%, 0.4%, 0.9% and 0.7%, respectively. Overall, the Industrial Select Sector SPDR (XLI) declined 0.6%, the highest among the S&P 500 sectors.
On the other hand, the energy sector emerged as the biggest gainer among the S&P industry groups with Energy Select Sector SPDR (XLE) gaining roughly 0.4%. Key energy stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Schlumberger Limited (NYSE:SLB), Halliburton Company (NYSE:HAL), Transocean Ltd. (NYSE:RIG) and ConocoPhillips (NYSE:COP) gained 0.5%, 0.5%, 0.1%, 0.2%, 1.4% and 0.9%, respectively. Overall, 6 out of 10 sectors of the S&P 500 ended in the green.
Economic data was largely encouraging. Existing home sales data released by National Association of Realtors rose 4.9% to a seasonally adjusted annual rate of 4.89 million in May from an upwardly-revised 4.66 million in April. Existing home sales increased at the fastest pace in seven months. A strong labor market, expansion in inventories and drop in mortgage rates were cited to be the reason behind strong growth in this metric.
Markit's preliminary US Manufacturing Purchasing Managers Index also moved upwards. The preliminary Markit US flash purchasing managers index increased to 57.5 in June from May’s final reading of 56.4. The preliminary June reading of business activity touched its highest level since May 2010. Separately, the Chicago Fed National Activity Index entered positive territory in May, boosted by a jump in the production level.