The major averages were sharply lower from the outset of trading, with sentiment taking a dive following news that a new strain of the virus was discovered in England that is reportedly more transmissible than the original COVID strain. The news from England has largely overshadowed the long awaited agreement on a U.S. stimulus package that might have otherwise lifted market sentiment. After weeks of back and forth talks, Congressional leaders reached a deal on roughly $900B of spending to support the economy and the House of Representatives is set to vote on the new stimulus plan today. The Dow has moved back into the green this afternoon, helped along by some post-earnings strength in Nike (NKE).
ECONOMIC EVENTS: In the U.S., the Chicago Fed's National Activity index declined 0.74 to a reading of 0.27 for November, which was weaker than expected but not a surprise given the renewed economic difficulties last month driven by the coronavirus.
TOP NEWS: Shares of Lockheed Martin (LMT) were 1% lower after the defense contractor announced a definitive agreement over the weekend to acquire Aerojet Rocketdyne (AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend. This represents a post-dividend equity value of $4.6B and a total transaction value of $4.4B including the assumption of net cash. Aerojet shares surged 24% after the announcement.
In other M&A news, RealPage (RP) shares jumped 29% after the company agreed to be acquired by private equity firm Thoma Bravo in an all-cash transaction that values RealPage at approximately $10.2B, including net debt. Under the terms of the agreement, RealPage stockholders will receive $88.75 in cash per share of RealPage common stock upon closing of the transaction.
On the earnings front, shares of Nike (NKE) were 5% higher after the sneaker and apparel giant reported better than expected second quarter results, with Nike Brand revenue rising 8% year-over-year. In addition, the company raised its fiscal 2021 revenue growth view to up by a low teens percentage from the previous range of up high single digits to low double digits.
Meanwhile, Tesla (TSLA) shares were down 4% as the company began trading today as a member of the S&P 500. Wedbush analyst Daniel Ives raised his price target on Tesla to $716 from $560, saying he sees a major inflection of electric vehicle demand globally heading into the year end and 2021.
MAJOR MOVERS: Among the noteworthy gainers was 500.com (WBAI), which surged 49% after announcing its board has proposed the company explore business opportunities in cryptocurrency, and named Xianfeng Yang as CEO and Bo Yu as COO. Also higher was NantKwest (NK), which rose 62% after announcing a stock-for-stock merger with Immunity Bio.
Among the notable losers was uniQure (QURE), which dropped 18% after announcing that its hemophilia B gene therapy program has been placed on a clinical hold. Also lower was FibroGen (FGEN), which fell 12% after announcing that the FDA has extended the review period of the new drug application for roxadustat for the treatment of anemia of chronic kidney disease by three months.
INDEXES: Near midday, the Dow was up 63.56, or 0.21%, to 30,242.61 , the Nasdaq was down 29.47, or 0.23%, to 12,726.17 , and the S&P 500 was down 14.85, or 0.40%, to 3,694.56 .
