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North America Stock Markets

North American Stock Markets

Source: Bloomberg
US stock indices fell on trade tensions, the government shutdown, and departures from the Trump administration.

North American Markets

• On October 14 military communication equipment providers Harris Corporation and L3 Technologies Inc announced an all-stock merger that will create the United States’ sixth-largest defence contractor. Increased defence spending under US President Trump is driving contractors to pursue mergers so they have more scale to bid on bigger projects, spanning everything from upgrading computer systems to space exploration. The shares of Harris and L3 rose by 11.9 percent and 12.8 percent, respectively, on the news.

• On October 29 International Business Machines Corporation (IBM) said the company would buy open-source software company Red Hat for $34 billion – the biggest tech deal of 2018 and IBM’s largest purchase in its 107-year history. Red Hat doesn’t sell software – it gives it away for free and then makes money supporting its users. Buying Red Hat allows IBM to broaden its offering in tech’s hottest growth area, cloud computing, to better compete with cloud giants Amazon and Microsoft. IBM fell 4.1 percent whereas Red Hat jumped 45.4 percent on the day.

• On October 30 General Electric Company (GE) slashed its dividend to a penny a share and fell short on earnings. GE reported earnings per share of $0.14 and revenue of $29.57 billion, missing analysts’ estimates of $0.20 and $30.25 billion, respectively, and said the dividend cut will save $3.9 billion of cash in 2019. GE’s share price plummeted 8.8 percent on the day.

• On November 7 US midterm elections went largely as expected as the Democratic Party gained control of the House from the Republican Party, winning the most seats, while the Republicans increased their majority in the Senate. Previously, both were Republican-held. US stocks were up overall on the day after the widely predicted result emerged, dispelling uncertainty, and the S&P 500 index rose 2.1 percent.

• On November 8 The Walt Disney Company reported strong earnings as sales increased by 12 percent over last year beating analyst expectations, while profit rose by 33 percent. This was mainly due to strong theme parks attendance during the summer months and better than expected performance of Disney’s Marvel movies like Ant-Man and the Wasp. Disney also announced the launch of the streaming platform Disney+ in the US in 2019 that will include film, TV, and online content from 21st Century Foxas well which Disney recently bought for $71 billion. Disney rose 1.7 percent the following day.

• On December 26, Inc announced that the company sold a record number of items throughout the holiday season. These sales could give the company a chance to beat its own outlook for the holiday season which disappointed investors after its last earnings report. Amazon’s stock rose 9.5 percent on the day of announcement.