Major benchmarks closed at record highs on Monday, thanks to newfound investor optimism around developments in the U.S.-China trade talks and possible completion of the phase one trade agreement before the year runs out. Reports of an array of mergers and acquisitions also induced optimism among investors.
The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — finished in the green on Monday. Dow closed at 28,066.47 after gaining 0.7%, the S&P 500 finished at 3,133.64 after adding 0.8% and the tech-laden Nasdaq Composite closed at 8,632.49 after increasing 1.3%.
The fear-gauge CBOE Volatility Index (VIX) declined 3.8% to close at 11.87 on Nov 25. Finally, advancers outnumbered decliners on the NYSE by a 2.75-to-1 ratio.
Headlines around Trade Talks Ignite Optimism Again
Investors banked on U.S. national security advisor Robert O’Brien’s comments on Nov 23 that a phase one trade deal with the Asian country could materialize before the end of 2019. However, he also said that President Donald Trump would not ignore the protests taking place in Hong Kong. Hong Kong has been crippled by extensive anti-government protests since June.
China returned the positive tone on trade remarks on Nov 24 by promising more protection for intellectual property rights, which is one of the most prominent issues in the trade negotiations between the two countries.
Mergers and Acquisitions Dominate the Day
Shares of Tiffany & Co. TIF added 6.2% after LVMH Moët Hennessy Louis Vuitton SE (LVMH), the world's biggest luxury goods company, confirmed an agreement on Nov 25 to buy the jewellery company in a bid of $16.2 billion (almost $2 billion higher than the initial bid LVMH made in October). The French luxury group will acquire Tiffany for $135 per share in cash. Tiffany will be a part of LVMH’s 79 brands, in its watches and jewelry division.
Shares of The Medicines Company gained 22.3% after the company announced that Novartis AG will acquire the biopharmaceutical company for $85 per share in an all-cash transaction. This brings the deal to a fully diluted equity value of $9.7 billion. After the completion of the tender offer, a wholly-owned subsidiary of Novartis AG will merge with The Medicines Company.
Both Tiffany and The Medicines Company carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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