Tesla, Apple, Dow Futures, Aimmune - 5 Things You Must Know Monday

Stocks are coming off their fifth consecutive week of gains; Apple and Tesla begin trading on a split-adjusted basis Monday; Aimmune will be bought by Nestle in a $2.6 billion deal.
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Here are five things you must know for Monday, Aug. 31:

1. -- Stock Futures Suggest a Higher for Wall Street

Stock futures were pointing to a higher start Monday after Wall Street posted its fifth consecutive week of gains.

Contracts linked to the Dow Jones Industrial Average rose 25 points, S&P 500 futures gained 6 points and Nasdaq futures were up 56 points.

The S&P 500 closed at a record high for the sixth straight session Friday, and the Nasdaq also set a record. The Dow moved into positive territory for the year. 

For the week, the S&P 500 jumped 3.3%, the Dow rose 2.6% and the Nasdaq gained 3.4%. 

Stocks got a boost last week from Federal Reserve Chairman Jerome Powell’s comments that the central bank would keep interest rates low even if inflation rises above its target levels.

Salesforce.com  (CRM) - Get Report, Amgen  (AMGN) - Get Report and Honeywell  (HON) - Get Report will be part of the Dow when it begins trading Monday. Those companies replace Exxon Mobil  (XOM) - Get Report, Pfizer  (PFE) - Get Report and Raytheon Technologies  (RTX) - Get Report, respectively.

The changes were “prompted” by Apple's  (AAPL) - Get Report 4-for-1 stock split, according to S&P Dow Jones Indices, since the split will reduce the Dow's tech-sector weighting.

2. -- Apple and Tesla Begin Trading After Stock Splits

Apple and Tesla  (TSLA) - Get Report shares will begin trading on a split-adjusted basis Monday.

Apple announced July 30 it would split its stock 4-for-1, while Tesla said Aug. 11 that its stock would be split 5-for-1.

What does it mean for investors? After Apple shares closed at $499.23  Friday, the split shares will be worth about $125. Tesla closed Friday at $2,213.40, so its post-split price will be about $443.

In premarket trading Monday, Apple was up 1.43% to $126.60. Tesla rose 2.42% to $453.38.

"It's a really interesting move, no doubt," said Pierce Crosby, general manager of TradingView, a social network for traders, about Apple's stock split. "As Apple approaches $2 trillion in market value, a stock split doesn't have value in itself, but it plays into the behavioral psychology of retail investors. If a trader wakes up and sees a price that's now 1/4th of what it was on the previous trading day, some will buy it out of natural instinct."

As for Tesla, it's "already richly valued with its P/E standing at over 200x, based on consensus projected 2020 earnings, meaning that the company will have to execute very well to simply justify its current valuation, let alone drive further stock price gains," said analysts at Trefis. "On the other hand, Apple’s P/E stood at 14x during its most recent split while Google’s P/E stood at 25x during its first (and only) split."

Bear Thoughts From an Apple Bull and the Dow Jones' Lesson

3. -- Aimmune to Be Acquired by Nestle for $2.6 Billion

Aimmune Therapeutics  (AIMT) - Get Report shares surged almost 170% in premarket trading Monday after Nestle agreed acquire the maker of peanut allergy treatments in a $2.6 billion deal.

Switzerland's Nestle will pay $34.50 a share for Aimmune, which makes Palforzia, the first treatment for peanut allergy to be approved by the Food and Drug Administration.

Aimmune shares closed at $12.60 on Friday. They were trading at $33.90 in premarket trading Monday, up 169.05%.

Nestle's health sciences division already owns a 26% stake in Aimmune. Including that stake, the deal has an enterprise value of about $2.6 billion. Bloomberg calculated that Nestle will be paying about $1.7 billion for the Aimmune shares.

The deal is expected to close in the fourth quarter.

"This transaction brings together Nestle's nutritional science leadership with one of the most innovative companies in food allergy treatment," said Nestle Health Science CEO Greg Behar. "Together we will be able to offer a wide range of solutions that can transform the lives of people suffering from food allergies around the world."

4. -- This Week's Calendar Highlights

The economic calendar in the U.S. Monday is light but reports later in the week will include the ISM Manufacturing Index, Factory Orders, weekly Jobless Claims, the Federal Reserve's "Beige Book," the ADP National Employment Report and come Friday, the official U.S. jobs report for August.

Earnings reports are expected Monday from Zoom Video Communications  (ZM) - Get Report and Rackspace Technology  (RXT) - Get Report.

Later in the week, reports will be issued by Macy's  (M) - Get Report, Crowdstrike  (CRWD) - Get Report, Campbell Soup  (CPB) - Get Report, Docusign  (DOCU) - Get Report and Broadcom  (AVGO) - Get Report.

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5. -- Buffett Buys Stakes in 5 Japan Trading Companies

Warren Buffett's Berkshire Hathaway  (BRK.A) - Get Report acquired slightly more than 5% of five of Japan’s biggest trading companies, Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. 

The holdings were acquired over the last 12 months through regular purchases on the Tokyo Stock Exchange, Berkshire Hathaway said in a statement.

The investments were valued at more than $6 billion combined after shares of all five companies jumped in Tokyo trading on Monday, Bloomberg noted.

Berkshire Hathaway said it intends to hold the investments for the "long term" and could boost its holdings up to a maximum of 9.9% in any of the five investments. However, Buffett said purchases likely won't be made beyond that point.