Stocks Move Lower on Low Volume
Stocks began the trading session on Tuesday mixed, as upward momentum has stalled in the face of the tensions in Ukraine, and lackluster economic data. Monday’s price action was telling as stocks were unable to follow through after starting the trading session with the Dow Industrials down triple digits. Stock investors will likely push equities higher as there is little to stand in the way of the positive sentiment even as Ukraine tensions escalate. Small business optimism declined by a larger amount than anticipated, and wholesale inventories rose more than forecasted.
The National Federation of Independent Business (NFIB) Small Business Optimism Index declined in February to 91.4 from an unrevised 94.1 in January, and compared to the decrease to 93.8 that economists surveyed had expected.
Crimea’s parliament has voted to declare independence from Ukraine ahead of a referendum this weekend in which the region’s citizens will decide whether to join Russia. The parliamentary ballot highlights the continued stalemate in the crisis. The people are likely to pass the referendum which will generate additional tensions in the region as Russian dominates the peninsula and is unlikely to back off despite calls from the EU and the US to leave Ukraine sovereign issues alone.
Same store sales were mixed as well, keeping retailers in check. JC Penny (NYSE:JCP) received an upgrade by Citigroup (NYSE:C) on Tuesday driving the stock up nearly 7%. McDonald’s Corp. (NYSE:MCD) cautioned that weak sales so far this year will pressure its first-quarter margins. McDonald’s said sales at established U.S. restaurants fell 1.4 percent last month. Analysts had expected a decline of just 0.6 percent in February sales at U.S. restaurants open at least 13 months.
In M&A news, Men’s Wearhouse (NYSE:MW) reached an agreement to acquire Jos. A. Bank Clothiers (NASDAQ:JOSB) for $65.00 per share in cash, or total consideration of $1.8 billion. MW said it expects the deal to create $100-150 million of annual synergies and be accretive to its earnings in the first full year.
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