Stocks end lower as stimulus bill falls eight votes short
Stocks spent the morning searching for direction, with the major averages spending some time on both sides of the flatline. However, the indexes found that direction in the afternoon, which was unfortunately lower. The tech-heavy Nasdaq was again the leader to the downside after Congress killed a "skinny" coronavirus relief bill.
ECONOMIC EVENTS: In the U.S., initial jobless claims were steady at 884,000 in the week ended September 5. The Producer Price Index rose 0.3% in August, with the core PPI rate increasing 0.4%, which point to hotter than forecast inflation. Wholesale inventories fell 0.3% in July, while sales climbed 4.6%, both of which were a little below forecast.
In Capitol Hill news, the Republican-backed COVID-19 stimulus bill proposed by Senator Majority Leader Mitch McConnell fell eight votes of the 60 needed to pass today's procedural phase.
TOP NEWS: Citi (C) announced that CEO Michael Corbat will retire from the company and step down from its board in February of 2021. The company's board has selected Jane Fraser, currently Citi's president and CEO of Global Consumer Banking, to succeed him as CEO in February, which will make her the first woman to head a major U.S. bank. She has also been elected to Citi's board, effectively immediately.
In M&A news, Volkswagen (VWAGY) subsidiary Traton informed the board of Navistar (NAV) that it has increased its proposed takeover offer to $43 per share from $35 per share. Traton, which already holds a share of 16.8% in Navistar, proposed in January to acquire all shares of Navistar it does not already own. Following the news, Navistar shares jumped 13.7%.
Shares of Kansas City Southern (KSU) were fractionally higher after The Wall Street Journal reported last night that the company has rejected a roughly $20B acquisition bid from a consortium of investors, including Global Infrastructure Partners and the infrastructure arm of private-equity giant Blackstone Group (BX). The railroad operator argued in its dismissal that the offer undervalues the company, according to the Journal, which noted that the group of suitors had offered the company $208 per share.
Virtusa (VRTU) shares surged 24.5% after the company agreed to be acquired by Baring Private Equity Asia, or BPEA, for $51.35 per share in a cash deal valued at roughly $2B. The transaction is expected to close in the first half of 2021.
Meanwhile, Nikola (NKLA) shares dropped 11.3% after short-selling research firm Hindenburg Research said it believes the company "is an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton's career." Milton has tweeted that the company would respond to Hindenburg's "lies" and the company later told Bloomberg in an emailed statement that Nikola has been vetted by "some of the world's most credible companies" and that the Hindenburg report contains "misleading" information.
In election news, Microsoft (MSFT) said in a blog post that it recently detected cyberattacks targeting people and organizations involved in the upcoming U.S. presidential election, including unsuccessful attacks on people associated with both the Trump and Biden campaign. The company said the majority of such attacks were detected and stopped by Microsoft's security tools. The news came as Twitter (TWTR) announced that it updated its policies regarding misinformation on its platform ahead of the U.S. election. "In recognition of the changing circumstances of how people will vote in 2020, and in line with our commitment to protecting the integrity of the election conversation, we're expanding this existing framework," the company said. "The goal is to further protect against content that could suppress the vote and help stop the spread of harmful misinformation that could compromise the integrity of an election or other civic process."
MAJOR MOVERS: Among the noteworthy gainers was Spotify (SPOT), which rose 1% after Credit Suisse analyst Brian Russo upgraded the stock to Outperform from Neutral. Also higher was RH (RH), which gained over 20% after reporting quarterly results.
Among the notable losers was Satsuma (STSA), which slid 75.9% after reporting data from a study of its STS101 powder as an acute treatment for migraine. Also lower was Sutro Biopharma (STRO), which fell 16.35% after reporting Phase 1 data on STRO-002 in ovarian cancer.
INDEXES: The Dow fell 405.89, or 1.45%, to 27,534.58, the Nasdaq lost 221.97, or 1.99%, to 10,919.59, and the S&P 500 declined 59.77, or 1.76%, to 3,339.19.