Stock Market Today: Why Stocks Are Stuck in a Trading Range
NEW YORK (TheStreet) -- In the absence of any major news headlines to trade on Tuesday, the broader U.S. market remained stuck in a trading range that it's been struggling to break out of for five weeks. Stocks declined as investors attempted to gauge whether wars in the Middle East will worsen, potentially spiking the price oil, also whether the U.S. government's crackdown on corporate inversion deals will staunch cross-border mergers and acquisitions.
The Dow Jones Industrial Average
Must Read: Warren Buffett's Top 10 Dividend Stocks
Watch the video below for a look at how U.S. markets are doing in midday trading Tuesday:The usual "tell-tale" signs of implied market fear and safe-haven action were little changed following the news that U.S. and Arab allies launched airstrikes overnight targeting ISIS (Islamic State) militants in Syria as well as the al-Qaeda-linked Khorosan Group. The VIX was up a bit but nowhere near average levels, crude oil futures were trading at about $91.50 to $92 a barrel, and the 10-year Treasury was sitting at about 2.55%.
"There's no flight to safety. The markets are seeing this as a distant problem," said S&P Dow Jones Indices' senior index analyst, Howard Silverblatt. Investors might have to wait until October before U.S. equities finally break out of the current range. Silverblatt puts the range for the S&P 500 at 1,972 to 2,011. Next month is when earnings news will dominate, with results picking up full steam by the third week of October and with more than 70% of S&P 500 companies reporting by month's end. The real reaction could be catalyzed by earnings season.
"Even if we get geopolitical issues that are major, earnings will probably dominate," said Silverblatt. Must Read: 7 Stocks Warren Buffett Is Selling in 2014 Next Monday, investors will get the details of the new regulations announced by the Treasury Department that are designed to limit the ability of U.S. firms to seek refuge in lower tax countries. The details are expected to provide the hard data on how exactly the new rules could impact the M&A plans of U.S. companies going abroad, especially to Europe.
"Next Monday, you'll actually know what it is, how it impacts, and what the proposal is," Silverblatt said. Administration officials haven't yet been able to say how many pending corporate inversions might be stopped by the new rules and wouldn't address whether the rules would block Burger King's (BKW) bid in August to acquire Tim Hortons (THI) , the Canadian coffee and doughnut chain. Burger King was losing 2.6% on Tuesday.
AbbVie's (ABBV) $55 billion deal to buy Shire (SHPG) also could be in jeopardy. Abbvie eased 2.64% and Shire lost 2.23%. Also in question was Pfizer's (PFE) ability to re-approach AstraZeneca (AZN) with another takeover offer after being rejected in May. Pfizer shares fell 0.86% and AstraZeneca retreated by 4.38%. CF Industries (CF) surged 6.52% after the fertilizer producer confirmed it's in discussions with Yara International on a potential merger of equals deal that could create a $27 billion global fertilizer giant. Philips (PHG) jumped 3.38% after the electronics giant said it will split into two companies; one focused on lighting and the other specializing in the health care and consumer-lifestyle businesses. Yahoo! (YHOO) was gaining back 0.43% after a big tumble on Monday to $38.65 as investors can now buy directly into Alibaba (BABA) . Dublin-based Actavis recently made a bid for Allergan (AGN) but the Botox maker rejected the proposal and is closing in on its own takeover of Salix Pharmaceuticals (SLXP) , The Wall Street Journal reported, citing people familiar with the matter. Allergan was 2.38% higher while Salix Pharmaceuticals tacked on 4.06%. Pershing Square Capital on Tuesday threatened to sue Allergan if the company were to follow through with its plan to buy Salix. Allergan wants to complete the transaction with Salix as a means to remain independent and protect itself from Valeant Pharmaceuticals' (VRX) $53 billion hostile pursuit, which Allergan's largest shareholder, Pershing Square, is backing.
Peabody Energy (BTU) rose 2.61% after raising its quarterly adjusted EBITDA outlook again.
Facebook (FB) gained 1.36%. The social media giant will unveil next week a new advertising platform designed to improve how marketers target and measure the advertisements they buy across the Web, the Journal reported, citing people familiar with the company's plans.
The SPDR Gold Trust ETF (GLD) was up 0.61%. The United States Oil Fund (USO) rose 0.94%. At 57.9 in September, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers' Index remained well above the neutral 50 value, Markit Economics reported on Tuesday. The FHFA purchase-only House Price Index rose 0.1% month over month in July, below the 0.5% consensus estimate. Must Read: 10 Stocks Carl Icahn Loves in 2014 -- By Andrea Tse and Kurumi Fukushima in New York Follow @AndreaTTse
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