The stock markets in the United States dropped today amid corporate deals and the recovery of government bonds. The equities of energy companies rebounded as oil prices increased.

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In a telephone interview with Bloomberg, Thomas Garcia, head of equity trading at Thornburg Investment Management commented, “The only thing has been a turnaround is the bond market, with yield lower making stocks more attractive.”

Garcia added, “It seems as though equity investors don’t believe rates are going up, and the bond investors do. Or maybe it’s just that equity investors believe it, but it will be at a slow pace.”

On the other hand, Matt Maley, an equity strategist at Miller Tabak & Co commented that investors need better news than what we have when the stock are at the high-end of historical range. He added, “The rise in rates isn’t coming form a better economy or a fundamental reason.”

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New York Federal Reserve Bank President William Dudley indicated that the timing of interest rate hike is uncertain, but the first increase will pave the way for a “regime shift” that will still the financial markets.

San Francisco Federal Reserve Bank President John Williams suggested that the central bank could raise the interest rates at any policy meeting.

Meanwhile, Bruce Bittles, chief investment strategist at RW Baird & Co. noted, “There are too many people who are in the stock market who should not be, and that is because of the Fed policies. At this point, we don’t think the Fed will raise interest rates this year, and all the talk of rate hikes is aimed at knocking the stock prices down.”

U.S. Markets

  • Dow Jones Industrial Average (DJIA) – 18,068.36 (-0.20%)
  • S&P 500- 2,099.09 (-0.30%)
  • NASDAQ- 4,976.19 (-0.35%)
  • Russell 2000- 1,233.37 (-0.20%)

European Markets

  • EURO STOXX 50 Price EUR- 3,573.10 (-1.42%)
  • FTSE 100 Index- 6,933.80 (-1.37%)
  • Deutsche Borse AG German Stock Index DAX- 11,472.41 (-1.72%)

Asia-Pacific Markets

  • Nikkei 225- 19,624.84 (+0.02%)
  • Hong Kong Hang Seng Index- 27,407.18 (-1.12%)
  • Shanghai Shenzhen CSI 300 Index- 4,748.00 (+1.23%)

Stocks in Focus

The stock price of AOL climbed more than 18% to $50.52 per share after reaching an agreement to sell itself to Verizon Communications for approximately $4.4 billion.  Needham analyst Laura Martin reiterated her Buy rating for the stock with a $57 price target.

The shares of Gap declined almost 4% to $38.36 per share after reporting its sales performance for the first quarter. The retailer posted net sales of $1.21 billion, down from $1.33 billion in the same period last year.

Pall Corporation gained more than 19% to $118.62 per share driven by the report that it is close to reaching a sale agreement. Its potential buyers included Danaher Corporation and Thermo Fisher Scientific.

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