Schwab Market Update: Stocks Remain Hamstrung as Conviction Continues to Cool
U.S. stocks are trading lower as another week begins on the heels of six-straight weekly losses for the S&P 500. Conviction toward the equity markets remains hamstrung by a plethora of concerns, chief among them being an aggressive Fed tightening campaign and persistently elevated inflation pressures. Concerns about slowing economic growth also has weighed on sentiment and the markets are digesting softer-than-expected April retail sales and industrial production out of China, and an unexpected drop into contraction territory for New York manufacturing output in May. M&A news is dominating the headlines, with JetBlue launching a hostile takeover of Spirit Airlines, and Carlyle Group agreeing to acquire ManTech International in a transaction with a total enterprise value of about $4.2 billion. Treasuries are higher to cool off the recent jump in yields, and the U.S. dollar is little changed after rallying to 20-year highs. Crude oil and gold prices are gaining ground. Asia finished mixed with China dipping on the data, and Europe is also diverging amid the host of headwinds, while the ongoing war in Ukraine is exacerbating the skittishness.
As of 10:56 a.m. ET, the Dow Jones Industrial Average is down 0.5%, the S&P 500 is declining 0.7%, and the Nasdaq Composite is dropping 1.3%. WTI crude oil is rising $0.84 at $111.33 per barrel, and Brent crude oil is advancing $0.39 at $111.94 per barrel. The gold spot price is trading $3.50higher to $1,811.70 per ounce, and the Dollar Index is little changed at 104.58.
In M&A news, JetBlue Airways Corporation (JBLU $10) launched a hostile takeover of Spirit Airlines Inc. (SAVE $19), offering $30.00 per share tender offer for the company, valuing it at about $3.3 billion. The offer comes as Spirit rejected a recent JetBlue offer of $33.00 per share, in favor of a previously agreed upon $2.9 billion deal to be acquired by Frontier Group Holdings Inc. (ULCC $9). JetBlue said it would be willing to re-offer the $33.00 per share for the company if Spirit negotiates with it in good faith, subject to receiving necessary diligence. JetBlue also urged Spirit shareholders to "vote no" on the "inferior, high risk, and low value" Spirit/Frontier transaction at its upcoming special meeting. SAVE is trading nicely higher, and ULCC is also rising, while JBLU is trading lower.
In other M&A news, Carlyle Group Inc. (CG $37) announced an agreement to acquire national security program solutions company ManTech International Corporation (MANT $94) for $96.00 per share in cash, in a transaction with a total enterprise value of about $4.2 billion. MANT is rallying over 10.0%, and CG is trading lower.
Carvana Co. (CVNA $40) is rising after the company late Friday laid out its operating plan in light of the current industry, macroeconomic, and financial market environment that has seen its stock fall nearly 88.0% even after today's gains. The online platform for used vehicle sales said it is focusing on three areas: growing retail units and revenue, increasing total gross profit per unit (GPU), and demonstrating operating leverage. The company added that it is elevating selling, general & administrative (SG&A) expense leverage, profitability, and positive free cash flow as priorities.