The major averages are stronger at midday as equities extend the rebound seen yesterday that followed three straight down days. The underlying drivers of the rally - a strong and broadening recovery, dovish monetary policy and expected further increases in federal spending - appear to remain intact, prompting some more dip buying after the pullback seen earlier in the week.
ECONOMIC EVENTS: In the U.S., April retail sales were unchanged month-over-month, and declined 0.8% excluding autos, both of which were weaker than forecast. Import prices rose 0.7%, with export prices up 0.8% in April, which was a little firmer than expected. Industrial production undershot estimates with a 0.7% April increase, while capacity utilization rose to 74.9% from 74.4%. A reading on consumer sentiment dropped 5.5 points to 82.8 in the preliminary figure for May from the University of Michigan survey. Business inventories edged up 0.3% in March, while sales rebounded 5.7%.
TOP NEWS: Shares of Disney (DIS) are 3% lower near noon after the company's mixed fiscal second quarter earnings report last night. While Disney's earnings per share, excluding certain items, topped consensus forecasts, its revenue was a bit light and most notably its Disney+ paid subscriber figures missed expectations. Citi analyst Jason Bazinet, who keeps a Buy rating on Disney with a $230 price target, said he expects shares of Disney to trade down today given that Disney+ subscribers fell towards the low end of buy-side expectations. However, he noted that management stressed that it is maintaining its long-term subscriber forecast of 230M to 260M in 2024.
Canadian National (CNI) announced that it submitted an "enhanced" binding superior proposal and merger agreement to Kansas City Southern (KSU) and Canadian Pacific (CP) responded by stating it will not enter into a bidding war but plans to respond in the "allotted time." Under the terms of CN's revised proposal, KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6% of the combined company. CN's proposal offers KCS shareholders $325 per common share based on yesterday's closing price of CN shares, which implies a total enterprise value of $33.6B, including the assumption of approximately $3.8B of KCS debt, the company's said.
In other M&A news, General Mills (GIS) announced that it has entered into a definitive agreement to acquire Tyson Foods' (TSN) pet treats business, which includes the Nudges, Top Chews and True Chews brands. The deal for $1.2B in cash provides an estimated tax benefit of $225M, "equating to an effective purchase price of $975M," said General Mills.
Two "sharing and gig economy" names are both rising following their earnings reports last night, as Airbnb (ABNB) gains 3% and DoorDash (DASH) rises 25% near noon. Another newcomer to public markets, Coinbase (COIN), is up fractionally following its first quarterly report since its direct listing last month.
MAJOR MOVERS: Among the noteworthy gainers was Plug Power (PLUG), which rose 12% after restating previously issued financial statements, saying the restatement did not not results from any override of controls or misconduct. Also higher were Aeva Technologies (AEVA) and Farfetch (FTCH), which gained 17% and 14%, respectively, after reporting quarterly results.
Among the notable losers was Aurora Cannabis (ACB), which declined 6% after the company reported quarterly results, announced that Ronald Funk has assumed the role of chairman, announced plans to file a $300M at-the-market offering program, and said it will transfer its U.S. listing from NYSE to Nasdaq effective May 24. Also lower after reporting quarterly results were Solid Biosciences (SLDB) and Poly (PLT), which fell a respective 21% and 18%.
INDEXES: Near midday, the Dow was up 288.21, or 0.85%, to 34,309.66, the Nasdaq was up 270.19, or 2.06%, to 13,395.18, and the S&P 500 was up 54.32, or 1.32%, to 4,166.82.
Disney
-5.79 (-3.24%)
KSU
+
Canadian National
-4.17 (-3.76%)
Canadian Pacific Kansas City
+0.302 (+0.37%)
Airbnb
+3.58 (+2.63%)
DoorDash
+26.3 (+22.69%)
Coinbase
+0.18 (+0.07%)
General Mills
+0.2 (+0.31%)
Tyson Foods
+0.375 (+0.47%)
Plug Power
+2.48 (+11.29%)
Aeva Technologies
+1.135 (+16.00%)
Farfetch
+5.38 (+14.50%)
Aurora Cannabis
-0.49 (-6.66%)
Solid Biosciences
-0.93 (-20.95%)
Symbol changed to POLY
-6.885 (-18.62%)