Stocks opened to narrow gains Monday, as investors cautiously eyed market overseas action related to Turkey’s developing Currency crisis.
Nielsen Holdings (NLSN) and Tesla (TSLA) hammered out early market leads. TAL Education (TAL) and New Oriental Education & Technology (EDU) suffered heavy losses due to a possible regulatory change in China. Amazon.com (AMZN) blipped higher to lead the FANG stock tech heavyweights, apparently lifted by an analyst report. Bayer (BAYRY) took a dive after a key jury U.S. court decision.
The Dow Jones industrial average and S&P 500 crept up 0.1%. Cisco Systems (CSCO) led the Dow. Nielsen headed the S&P 500 by a wide margin. The Nasdaq Composite traded 0.2% higher, with Tesla leading the Nasdaq 100. (For updates on this story and other market coverage, visit the Stock Market Today.)
Almost midway through August, the Nasdaq Composite is the market’s clear leader — up 2.2% so far in August, tapping out new highs and tacking toward a fifth straight monthly gain. The index has posted only six monthly declines in the past 31 months.
The Dow Jones industrial average starts Monday down 0.4% for the month. The index has a 1% margin above its 50-day line of support, but continues to trade more than 5% below its high for the year, set in January.
The S&P 500 has a 0.6% gain so far in August. It is 2% above its 50-day moving average and working on its fifth straight monthly advance. It is 1.4% from its January high.
Turkey’s currency crisis again dragged on global currency markets and investors confidence. Turkey’s Central Bank limited foreign currency swaps late Sunday, and intervened Monday to pull the lira off its early lows. The currency was down about 7% vs. the dollar on Monday, and has more than 40% of its strength against the dollar so far this year. Investors are concerned about exposure of European banks to Turkey’s economy.
However, a report that Turkey would release Andrew Brunson, an American pastor, from house arrest boosted the lira and lifted U.S. futures somewhat. Turkey has detained Brunson for nearly two years, worsening U.S.-Turkey relations.
Markets across Asia suffered very hard hits. China’s mainland markets were largely insulated from the selling, with the Shanghai Composite dipping only 0.3%. But Hong Kong’s Hang Seng index slumped 1.5%. In Japan, Tokyo’s Nikkei 225 tanked 2% as the yen surged.
Europe’s markets trimmed their losses in afternoon trade. Frankfurt’s DAX was off 0.5%. London’s FTSE 100 took a 0.4% hit. The CAC-40 in Paris eased to a fractional decline.
Tesla shares jumped almost 2%, after CEO Elon Musk confirmed discussions with Saudi Arabia’s sovereign wealth fund about taking the company private were ongoing. A Sunday blog post and Monday tweet from Musk said there was no question a private deal could be reached. Musk said he believed two-thirds of shareholders would remain if a deal were reached, and that estimates of $70 billion needed to go private were overstated.
Intel narrowed to 0.2% gain, after Cowen & Co. trimming the stock’s price target to 49, from 52. Cowen rates the stock at market perform. Intel shares are in a two-month consolidation, and trading below both their 10- and 40-week moving averages.
Amazon swung up more than 1%. A Piper Jaffray note projected the e-commerce giant’s ad revenue would hit $8 billion this year, contributing as much as $3 billion in operating profit. The analyst forecast ad revenue of $16, and surpassing revenue from the company’s vaunted cloud services business in 2021. Amazon shares were trading just below new highs on Friday, and were extended after a breakout in April.
Earnings season slows this week, but a handful of key names are still due to report. Retail could be a focal point for the week. Macy’s (M), Home Depot (HD) and Walmart (WMT) are all due to release quarterly earnings.
Nielsen Holdings popped 13% in early action. News reports said activist investor Elliott Management has amassed an 8% position in the TV ratings company. The position was estimated at $640 million. Elliott was reportedly pushing for the company to sell itself. Nielsen shares are down 61% from a July 1016 high.
German drug and medical products giant Bayer tanked more than 10% in early trade, after a jury in a California state court awarded $289 million to a plaintiff who claimed exposure Monsanto’s Roundup herbicide caused cancer. The trial was seen as a test case, the first of thousands of claims against the company. Bayer closed its $66 billion acquisition of Missouri-based Monsanto in June. The company plans to appeal the case.
China-based education names narrowed the early losses that had followed news reports said China’s Ministry of Justice had drafted legislation that could limit the ability of private businesses to acquire public schools. TAL Education was down more than 2%, New Oriental Education & Technology eased to a 1.3% loss. China has drafted legislation that would limit for-profit schools’ growth via acquisitions and partnerships with public schools.
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