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Markets Down, Activision Up on Microsoft Buyout

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Tuesday, January 18, 2022

Pre-market futures emerge from a dormant three-day weekend (commemorating Martin Luther King’s birthday Monday) with a sharp downturn in index activity: the Dow is -310 points at the hour, the Nasdaq -250 and the S&P 500 is -50 points. This continues the downward slope we’ve seen since the Dow and S&P set new record closing highs in the first trading week of the month.

Triggering this latest downward move can partially laid at the feet of the 10-year treasury bond yield, which ramped up to 1.82% — its highest level in two years. We also see a very disappointing Empire State index for January, which came in -0.7 from expectations of +25 — also the worst mark since the spring of 2020, when the initial impact of the pandemic was still resounding.

One stock bucking this downward trend is Activision Blizzard (ATVI - Free Report) , which is up +38% in today’s pre-market on the unexpected announcement that it is being bought by Microsoft (MSFT - Free Report) for $68.7 billion, or $95 per share. This morning’s gains brings the share price of the Call of Duty and Spiderman video game franchises to around $90 this morning. While still below recent ATVI highs, this announcement has also helped MSFT stock down -1.5%.

And Goldman Sachs (GS - Free Report) also disappointed investors this morning, posting earnings of $10.81 per share versus the Zacks consensus of $12.10, which itself was basically in-line from year-ago earnings. Revenues in the quarter of $12.64 billion surpassed the $12.09 billion analysts were expecting, but following the Q4 release, shares of Goldman tumbled -4.2% in pre-market trading.

Like big banks JPMorgan and Citigroup last week, operating expenses have reportedly taken a bite out of Goldman’s earnings, with higher employee pay and benefits joining pricier tech investments. Expenses rose +23% year over year. This is only the third miss for the elite Wall Street investment bank in the past five years. Goldman Sachs stock grew +45% through all of 2021.

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