Stocks opened sharply higher thanks to optimism surrounding the trade talks between the U.S. and China as well as some changes made by MSCI to boost the weight of Chinese stocks in its global benchmarks. The averages saw their highs shortly after the open and then began to drift lower. The early economic reports did little to help support the market, as they were generally in-line with expectations if not slightly worse, which applied some mild pressure. The Dow has moved back to flat, though the S&P and Nasdaq are holding onto mild gains at midday.
ECONOMIC EVENTS: In the U.S., personal income climbed 1.0% in December, and fell 0.1% in January, with a 0.5% decline in December spending. Markit's manufacturing PMI dropped 1.9 points to 53.0 in February, compared to a 53.7 preliminary reading for the month. The U.S. ISM fell to a 2-year low of 54.2 in February, after a January pop to a robust 56.6 reading. The University of Michigan consumer sentiment reading bounced to a downwardly-revised 93.8 in February. This compares to a prelimiary 95.5 figure for February and a 91.2 reading in January.
TOP NEWS: Shares of Gap Inc. (GPS) have surged 19% higher after the apparel retailer said it plans to separate Old Navy into a standalone company. Meanwhile, the company also announced quarterly results and said it would close 230 Gap brand specialty stores over the next two years.
Tesla (TSLA) shares are reacting negatively to the company's host of announcements last night, sliding 8% near noon. The electric carmaker announced the long promised standard version of the Model 3 for $35,000, while also disclosing the company will not be profitable in Q1 and that it plans to move to an all-online sales model and close most of its existing showrooms.
In activist investor news, Caesars Entertainment (CZR) announced that it has entered into an agreement with Carl Icahn regarding, among other things, the membership and composition of the company's board of directors. Under the terms of the agreement, Keith Cozza, Courtney Mather and James Nelson are being appointed to Caesars' board and Icahn has the right to appoint a fourth representative to the board if a new CEO who is acceptable to new directors is not named within 45 days. Additionally, eBay entered into a cooperation agreement with affiliates of Elliott Management, who hold more than a 4% economic interest, and one with affiliates of Starboard Value, who hold an economic interest of approximately 1%. eBay, which said it has worked collaboratively with Elliott, Starboard, and other significant shareholders, announced several new initiatives, including an operating review and the commencement of a strategic review of the company's portfolio of assets.
In IPO news, Lyft (LYFT) filed its S-1 with the SEC to begin the formal process of becoming a publically traded company. The ridesharing service operator, which applied to list its common stock on the Nasdaq under the ticker symbol "LYFT," disclosed that the company's revenue was $343.3M, $1.1B and $2.2B in 2016, 2017 and 2018, respectively. The banks working with Lyft are discussing company valuations of between $20B and $25B, according to Bloomberg.
MAJOR MOVERS: Among the noteworthy gainers was Lexicon (LXRX), which rose 27% after it said that the European Medicines Agency's Committee for Medicinal Products for Human Use has adopted a positive opinion on the marketing authorization of Zynquista, developed by Sanofi (SNY) and Lexicon. Also higher were Puma Biotechnology (PBYI) and AMC Entertainment (AMC), which gained a respective 40% and 13% after reporting quarterly results.
Among the notable losers was ImmunoGen (IMGN), which dropped 46% after it said that the Phase 3 FORWARD I trial did not meet its primary endpoint of progression-free survival. Also higher were Nutanix (NTNX) and Intrexon (XON), which fell 33% and 34%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was up 1.26 to 25,917.26, the Nasdaq was up 10.11, or 0.13%, to 7,542.64, and the S&P 500 was up 3.37, or 0.12%, to 2,787.86.
