As the day wrapped up on February 19, 2024, the financial markets witnessed a notable potential acquisition in the credit card sector. Capital One Financial (COF, Financial) is reportedly nearing an all-stock deal to acquire Discover Financial Services (DFS, Financial), with an announcement possible as early as Tuesday. The acquisition, if confirmed, would unite two significant players in the credit card market, with Capital One planning to retain the Discover brand. Shares of Discover Financial surged on the news, reflecting investor optimism about the deal's premium valuation over Discover's $28 billion market cap. However, the discussions are ongoing, and there is no guarantee that they will result in an agreement.
In the healthcare and life sciences sector, a KPMG survey indicates a bullish outlook for mergers and acquisitions (M&A) in 2024. The survey reveals that 61% of respondents expect an increase in deal activity, with half of them projecting higher valuations for deals this year. This optimism is attributed to a bimodal deal market, where competitive targets command higher valuations. The survey also highlights that a significant portion of firms plan to ramp up their M&A activity, with 31% aiming for an increase of less than 10% and 22% looking for a rise of 10% or more.
Investors and traders will take a brief pause from the stock market on Monday due to the observance of Washington's Birthday, also known as Presidents' Day. While the U.S. bond and commodities markets will be closed, stock futures will remain active with minimal movement. This break provides market participants with an opportunity to digest recent economic data, which has presented mixed signals regarding the risk of overheating or recession in the economy. The upcoming week promises to bring more insights with major earnings reports and economic indicators on the horizon.
Earnings season continues with several major companies set to report before the opening bell on Tuesday. Retail giants Walmart (WMT, Financial) and The Home Depot (HD, Financial), along with Medtronic plc (MDT, Financial), Transocean Ltd. (RIG, Financial), and DigitalBridge Group (DBRG, Financial), are among those expected to release their financial results. The earnings announcements will provide further insights into the health of various sectors and potentially influence market sentiment.
J.P. Morgan's tracking report of the fourth quarter earnings season reveals that 78% of the S&P 500 companies that have reported thus far have surpassed profit estimates, indicating a 5% year-over-year growth. However, excluding the results of the 'Magnificent 7' tech giants, the earnings growth for the U.S. shows a decline. The report also notes that while sectors like energy, materials, and utilities are experiencing negative growth, areas such as discretionary, technology, and communication services are driving the majority of the earnings expansion.
The recent Super Bowl event set new records for bookmakers in the U.S., with betting handle estimated to have increased by 27% year-over-year in key states. Flutter Entertainment's (FLUT, Financial) FanDuel and MGM Resorts International (MGM, Financial) with Entain's BetMGM reported significant jumps in betting handle, although the gross gaming revenue margins were impacted by the game's outcome. This data underscores the growing significance of sports betting in the U.S. entertainment and gaming industries.
In semiconductor manufacturing, GlobalFoundries (GFS, Financial) is set to receive a $1.5 billion grant from the U.S. government to expand its facilities and boost domestic chip production. This investment is part of the U.S. CHIPS and Science Act and aims to support the auto industry, among other sectors. The expansion will include a new state-of-the-art fab and modernization of an existing facility, with significant investment planned over the next decade.
Hedge funds turned their attention to China last month, with positive returns overall. Goldman Sachs reports that hedge funds gained 1.2% in January, with net buying of Chinese equities despite the Shanghai Composite's decline. The report highlights that all strategies had a positive month, with fundamental equity long/short and systematic managers leading the performance.
JD.com (JD, Financial) is considering a proposal to acquire London-based electronics retailer Currys, potentially entering a bidding war with Elliott Investment Management. Currys' stock soared on the news, while JD.com's shares saw a decline. The interest in Currys comes as the retailer faces challenges in Scandinavia and the U.K. due to competitive discounting and cost-of-living pressures.
iQIYI (IQ, Financial) reported a significant increase in AI search usage during the Chinese New Year holiday, with substantial growth in viewing time for variety shows and the new drama 'Always on the Move.' This data reflects the platform's engagement levels and content popularity during a key holiday period.
Daiichi Sankyo (DSNKY, Financial) announced the acceptance of its biologics license application with AstraZeneca for datopotamab deruxtecan, a treatment for metastatic nonsquamous non-small cell lung cancer. The FDA's decision is expected by December 20, 2024, based on the results from the TROPION-Lung01 phase 3 trial.
AstraZeneca (AZN, Financial) shared positive results from its LAURA Phase III trial, where TAGRISSO showed a significant improvement in patients with Stage III non-small cell lung cancer after chemoradiotherapy compared to placebo. The trial will continue to assess overall survival as a secondary endpoint.
