Stocks opened lower Monday but climbed into positive territory by the close. Investors’ attention this week is trained on Wednesday’s release of the May Consumer Price Index (CPI) report and the conclusion of the Fed meeting.
Today, though, the economic calendar was bare, so market participants turned to a raft of single-stock headlines hitting the wires.
Most notable was news that cybersecurity stock CrowdStrike (CRWD, +7.3), private equity firm KKR (KKR, +11.2%) and web domain firm GoDaddy (GDDY, +1.9%) will be joining the S&P 500 later this month. The trio will replace staffing company Robert Half (RHI, +1.5%), regional bank Comerica (CMA, -1.7%) and genetic sequencing firm Illumina (ILMN, -3.4%).
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“Stocks tend to get a lift from inclusion in the S&P 500 because many trillions of passive dollars are held in products that track the index,” wrote Dan Burrows, senior investing writer at Kiplinger, in his coverage of the three stocks’ inclusion in the S&P 500. “The bottom line is that loads and loads of passive funds and ETFs now have to pick up shares in CRWD, KKR and GDDY.”
Noble to buy Diamond Offshore Drilling for $1.6 billion
Noble (NE) stock rose 6.1% after the oil drilling company agreed to buy Diamond Offshore Drilling (DO) for $1.6 billion in cash and stock, or $15.52 per DO share. DO, meanwhile, jumped 10.9%.
Noble’s bid for Diamond continues a busy stretch of merger-and-acquisition (M&A) news in the oil patch that started last fall when Exxon Mobil (XOM, +0.3%) unveiled its $60 billion bid for Pioneer Natural Resources.
More recently, ConocoPhillips (COP, +1.2%) said it will buy Marathon Oil (MRO, +1.5%) for $17.1 billion.
Elliott takes a massive stake in Southwest Airlines
Southwest Airlines (LUV) stock was another big mover Monday, rallying 7.0% on news activist investor Elliott Investment Management accumulated a nearly $2 billion stake. According to The Wall Street Journal, Elliott plans to push for changes to reverse recent underperformance by the airline, including replacing current CEO Bob Jordan and overhauling the board of directors.
“The approach of an activist investor in Southwest Airlines is interesting at this juncture given that the company is investing capital to improve operations and lower costs,” says Peter McNally, global sector lead for industrials, materials and energy at Third Bridge. “At least for the time being, it is hard to see what new strategy Southwest could pursue given that future growth is dependent on Boeing (BA, -0.06%) delivering more planes.”
Apple tumbles on the first day of WWDC 2024
Apple (AAPL) stock slumped 1.9% – making it the worst Dow Jones stock today – as investors took in the first day of announcements from the company’s annual Worldwide Developers Conference (WWDC).
Particularly noteworthy were the onslaught of artificial intelligence (AI) initiatives Apple unveiled. In addition to Apple Intelligence, its suite of AI offerings for its devices, the company also said it is teaming up with OpenAI to offer a ChatGPT function for its personal assistant Siri.
This year’s WWDC is a key event for Apple “as the pressure to bring a generative AI stack of technology for developers and consumers is front and center with Cook & Co. set to make history for Cupertino,” says Wedbush analyst Daniel Ives (Outperform, the equivalent of a Buy). “We believe AI technology being introduced into the Apple ecosystem will bring ample monetization opportunities on both the services as well as iPhone and hardware front.”
Despite AAPL’s down day, the Dow Jones Industrial Average rose 0.2% to 38,868 on strength in retailers Home Depot (HD, +1.7%) and Walmart (WMT, +1.6%). The S&P 500 added 0.3% to 5,360, while the Nasdaq Composite gained 0.4% to 17,192.
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