weekly summary
The Dow ended in the green for the week with a 0.4% gain, the S&P rose 0.6% and the Nasdaq jumped 1.4%. Stocks revved higher on Friday afternoon after the Federal Reserve report to Congress gave little indication that the central bank plans to raise interest rates more aggressively than anticipated this year. Treasury yields eased at the end of the week, with the yield on the 10-year bond dropping to 2.87%. Check out Seeking Alpha's latest Stocks to Watch article for a preview of next week's action.
Economy
Tuesday:
It's the latest trade tension escalation between the world's top two economies. China has threatened retaliation after the Trump administration received a green light to impose steep tariffs on aluminum and steel imports on national security grounds. "If the final decision from the U.S. hurts China's interests, we will definitely take necessary measures to protect our rights," said Wang Hejun, a senior official at China's Commerce Ministry.
Wednesday:
Britain could withhold payment of its £39B Brexit divorce bill if the EU doesn't give it a trade deal, according to Brexit Secretary David Davis. "We have been very plain... Article 50 says the withdrawal agreement has to take into account the future relationship. They're bound up in one, they're not a separate issue."
Stocks sold off into the close after being higher for most of the day as the release of the minutes from the January FOMC meeting did little to ease worries that the Fed could move to raise rates more than three times previously expected for 2018. Almost all FOMC members expected inflation to increase in 2018 and a majority of members believed a stronger outlook for economic growth raised the "likelihood that further gradual policy firming would be appropriate."
Thursday:
President Trump's Council of Economic Advisers has warned that taxing gasoline to pay for infrastructure improvements is an "imperfect" system. "The gas tax's current design isn't really a 21st century design - that the gas tax was set at levels that were needed to fund highways back in the days when fuel economy was really low and we didn't have electric cars," said Kevin Hassett, the council's chairman.
Friday:
There were few surprises in the Fed's semi-annual monetary policy report. Anyone looking for a hint that four rate hikes are planned for this year (vs. the three expected by markets) probably won't find it. And anyone looking for a hint that there will be fewer than three won't find that either. Next week, Fed Chairman Jay Powell makes his first appearance in front of Congress.
Stocks
Tuesday:
Albertsons has agreed to purchase the rest of Rite Aid (NYSE:RAD) that is not being sold to Walgreens Boots Alliance (NASDAQ:WBA) for an undisclosed sum, as retailers respond to the recent M&A in the pharmacy sector and rapidly changing consumer landscape. The cash-and-stock deal will also allow Albertsons to go public after more than a decade of ownership by private-equity giant Cerberus Capital.
Wednesday:
Apple is in talks to buy long-term supplies of cobalt directly from miners for the first time, seeking to procure "several thousand" metric tons of cobalt per year for a period of at least five years, Bloomberg reports. The strategy is designed to buffer Apple's (NASDAQ:AAPL) reserves of the key lithium ion battery ingredient amid industry fears of a shortage driven by the electric vehicle boom.
Thursday:
Chipmaker drama... Qualcomm has increased its takeover bid for NXP Semiconductors (NASDAQ:NXPI), defying Broadcom's (NASDAQ:AVGO) demand that it not do so. In retaliation, the latter shaved $3 per share off its hostile takeover bid for Qualcomm (NASDAQ:QCOM), reducing it to $79 a share, but said it would rise again if Qualcomm failed to complete its purchase of NXP. The change has "made an inadequate offer even worse," Qualcomm said in response.
Friday:
General Mills is moving into the pet food business with a deal to buy Blue Buffalo (NASDAQ:BUFF) for $40 a share, or nearly $8B in cash. The transaction, which will help the company offset intensifying competition in the packaged food industry, is expected to be neutral to General Mills' (NYSE:GIS) cash earnings per share in fiscal year 2019, but will add to earnings in fiscal year 2020.
BlackRock will speak with weapons manufacturers "to understand their response" to the second-deadliest public school shooting in U.S. history, putting pressure on American Outdoor Brands (NASDAQ:AOBC) and Sturm, Ruger & Company (NYSE:RGR). While it has stopped short of saying it would divest its funds of gunmakers, BlackRock (NYSE:BLK) is the largest shareholder in both companies and has more than $6T in assets under management.
