The stock markets in the United States declined primarily due to investors’ concern regarding the strength of the economy based on economic data.
Sign up for our free newsletter
Today, the Department of Commerce Bureau of Economic Analysis reported that the U.S. gross domestic product (GDP) declined at an annual rate of 0.7% in the first quarter of 2015. During the fourth quarter of 2014, the U.S. GDP increased 2.2%.
The agency noted that the GDP decline during the quarter was primarily caused bu negative impacts from exports, nonresidential fixed investment, state and local government spending.
In an interview with Bloomberg, Kevin Caron, a market strategist and portfolio manager at Stifel Nicolaus & Co. commented, “GDP is kind of an old story — we already knew it contracted, but the Chicago PMI number came in unexpectedly low. It could be that the market was hoping for a better number, and didn’t get the support it wanted. There’s conflicting data on the strength of the economy.”
A separate report indicated that the manufacturing activity in the Chicago area declined to its lowest level this month.
The University of Michigan final index of consumer sentiment dropped from 95.9% in April to 90.7% in May, the largest decline since the end of 2012. Richard Curtin, director of the Michigan Survey of Consumers, said, “The index is still quite high. I expected confidence to inch upward, and I still think that is likely over the months ahead.”
U.S. Markets
- Dow Jones Industrial Average (DJIA) – 18,010.68 (-0.64%)
- S&P 500- 2,107.39 (-0.63%)
- NASDAQ- 5,070.03 (-0.55%)
- Russell 2000- 1,247.78 (-0.42%)
European Markets
- EURO STOXX 50 Price EUR- 3,570.78 (-2.19%)
- FTSE 100 Index- 6,984.43 (-0.80%)
- Deutsche Borse AG German Stock Index DAX- 11,413.82 (-2.26%)
Asia-Pacific Markets
- Nikkei 225- 20,563.15 (+0.08%)
- Hong Kong Hang Seng Index- 27,424.19 (-0.11%)
- Shanghai Shenzhen CSI 300 Index- 4,840.83 (+0.14%)
Stocks in Focus
The stock price of Altera climbed 4% to $48.85 per share. Intel is reportedly close to reaching an agreement to acquire Altera for approximately $15 billion or $54 per share. The proposed acquisition price represents a 15% premium to Altera’s closing price of $46.97 per share on May 28.
Avago Technologies gained 4% to $148.07 per share. Analysts at Pacific Crest raised their price target for the stock to $180 per share and maintained their Overweight rating. The analysts believe that Avago’s acquisition of Broadcom is strategically sensible and estimated that the deal would generate cost synergies of $750 million. It is expected to boost its earnings to $12.04 per share by 2016.
The shares of Humana closed $20.31 per share, up by more than 20% amid sale speculations. The Wall Street Journal reported that Humana received takeover interests from potential buyers such as Aetna and Cigna.
