4B
MONEYLINE
NEWS MONEY SPORTS LIFE AUTOS TRAVEL 19,000
STOCK SOARS 37% ON POSTPARTUM-DRUG SUCCESS Sage Therapeutics soared 37% to close at $46.21 Tuesday following the successful phase 2 clinical trial of its SAGE-547 drug for severe postpartum depression. The drug offers a potential cure for the disorder, which affects one in seven women, according to the American Psychological Association.
L awrence J ournal -W orld - USA TODAY WEDNESDAY, JULY 13, 2016
BACK IN RECORD TERRITORY
May 19, 2015 18,312.39
The Dow Jones industrial average closed Tuesday at a record high, surpassing the previous mark set in May 2015.
18,000
July 12, 2016 18,347.67
17,000
16,000
Aug. 25, 2015 15,666.44
SOURCE Bloomberg KRIS KINKADE, USA TODAY
Feb. 11, 2016 15,660.18
5 DOW STOCKS
AMC THEATERS
AMC TO ACQUIRE EUROPE’S LARGEST THEATER CHAIN AMC Entertainment Holdings said Tuesday it had reached a $1.2 billion deal to acquire Europe’s largest theater chain, London-based Odeon & UCI Cinemas Group. The deal would add 242 theaters, 2,236 screens and $1.2 billion in annual revenue to AMC’s portfolio. AMC currently operates 385 theaters with 5,380 screens, mostly in the U.S.
DAZZLE
Latest record-breaking run pushes the market measure into new high ground Matt Krantz
HEDGE FUND TO PAY RECORD SETTLEMENT OF $11 MILLION An activist hedge fund has agreed to pay a record $11 million to settle allegations some of its entities violated federal law by trying to promote the $35 billion merger of oilfield services giants Halliburton and Baker Hughes, the Department of Justice announced Tuesday. DOJ said ValueAct bought the firms with the intent to influence their decisions. The companies canceled the merger in May after DOJ filed a lawsuit to block it. DOW JONES INDUSTRIAL AVG. 18,450 18,400
4:00 p.m.
120.74
18,348
18,350 18,300 18,250 18,200
9:30 a.m.
18,227
TUESDAY MARKETS INDEX
Nasdaq composite S&P 500 T-note, 10-year yield Oil, light sweet crude Euro (dollars per euro) Yen per dollar
CLOSE
CHG
5,022.82 2,152.14 1.51% $46.46 $1.1067 104.79
x 34.18 x 14.98 x 0.08 x 1.95 x 0.0009 x 2.02
SOURCES USA TODAY RESEARCH, MARKETWATCH.COM
USA SNAPSHOTS©
Meeting canceled On average, workers feel
about 1 in 3
meetings could be eliminated while still accomplishing their objectives. SOURCE Post-it Brand survey of 1,000 U.S. full-time office workers JAE YANG AND KARL GELLES, USA TODAY
@mattkrantz USA TODAY
Big gains from a handful of bigname stocks helped propel the Dow to record-breaking heights Tuesday. Five stocks in the Dow Jones industrial average, including McDonald’s, Home Depot and insurer UnitedHealth, are the biggest drivers, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Each of these stocks has contributed more than 100 points to the market measure since it hit its last high on May 19, 2015. These five stocks together added nearly 700 points to the Dow, making them a top driver of the Dow’s 35-point gain from its last peak and enough to counteract the 13 Dow stocks that have fallen since then. The Dow jumped more than 120 points Tuesday to 18,348, pushing past the 18,312.39 high set in 2015. Seeing the Dow hit new highs is the latest confirmation of the power of this raging bull market. The broader Standard & Poor’s 500 index pushed further into record territory Tuesday after hitting a new closing high Monday. The S&P 500 was up another 0.7%. But the fact that many of the winners hail from defensive industries such as health care shows that while markets are hitting highs, investors are still nervous, says Jack Ablin, chief investment officer at BMO Private Bank. “U.S. equity markets are breaking records led by defensive companies against a backdrop of lower interest rates,” Ablin says. “To me, this seems like investors are stocking up on canned goods before a storm.” Home Depot, riding a homebuilding and remodeling boom powered by perpetually low interest rates, has been the darling of the Dow. The stock is up 20% from the Dow’s former high and has added 155 Dow points since
JOE RAEDLE, GETTY IMAGES
Home Depot, riding a home-building and remodeling boom powered by perpetually low interest rates, is one Dow darling.
DOW WINNERS Biggest Dow point winners from May 19, 2015, the previous high: Company July 12 price Points from previous high Home Depot $134.84 155.18 McDonald’s $122.25 148.76 UnitedHealth $139.86 133.18 Johnson & Johnson $122.92 130.76 3M $179.16 110.63 SOURCE S&P GLOBAL MARKET INTELLIGENCE; USA TODAY
then. Investors have high hopes for the company’s profit power. Analysts are calling for the company to earn an adjusted $1.97 a share in the quarter ended in July, up 15% from the same period last year. Such rapid growth from a large company is in stark contrast to the rest of the S&P 500, which is expected to see adjusted profit fall roughly 5% during the quarter. Another big winner is McDonald’s, which has benefited from the successful launch of offering breakfast items all day. The company has seen its stock soar 21.4% from the Dow’s last high, adding nearly 150 points to the measure. Analysts expect its profit to start growing again, calling for nearly 8% higher adjusted second-quarter profit. That would be the third consecutive quarter of profit growth and a welcome change from the 8% decline in the second quarter of 2015. The company and stock are being driven by
“reorganization, new growth initiatives (and the) same-store sales turnaround,” says John Staszak, analyst at Argus Research. Several health care stocks have lit it up, too, including Johnson & Johnson and UnitedHealth. Investors’ interest in defensive stocks that pay stable dividends has been a recurring theme in the bull, which plays into health care’s wheelhouse. Even if the economy were to cool, health care demand remains fairly stable. Shares of J&J and UnitedHealth are up 18.2% and 16% respectively from the market’s last high. UnitedHealth is currently yielding 1.8% and J&J yields a market-beating 2.6%. Now that the Dow and S&P 500 have retaken their highs, that leaves just the tech-heavy Nasdaq — still roughly 4% below its high — to catch up. But there are plenty of big gains for investors to enjoy while they’re waiting on tech.
Pokémon Go gives Nintendo extra life Adds about $12B in value; Google, Apple, AR go along for ride Jon Swartz @jswartz USA TODAY
Pokémon Go hasn’t just turned augmented reality on its ear. It has revitalized the Nintendo brand, adding billions of dollars in market value to the gaming company in days. And the smartphone game, in which players search for animated characters superimposed on real-life images on their phone screens, also adds to the fortunes of Google and Apple. So far, Kyoto, Japan-based Nintendo, a minority holder in the developer of the game, has been the prime beneficiary. The value of Nintendo shares catapulted $12 billion, to about $30 billion — a prodigious payoff to its slow-evolving mobile gaming strategy — since Go debuted last week. Nintendo shares jumped 13% in trading Tuesday after a 25% surge Monday, sending the Tokyo stock market rocketing for two consecutive days and feeding expectations for copycats from other gamemakers. SAN FRANCISCO
“This shows a big shift for Nintendo, from being a hardware company to a software company.” Bryan Buskas, AdColony
Hopeful investors anticipate a windfall in advertising and licensing revenue for Nintendo, part owner of Niantic Labs, which created Pokémon Go, and a 32% owner of Pokémon Co., which controls the merchandising of Pokémon characters. Nintendo also plans to sell a $35 handheld device called Pokémon Go Plus. “This shows a big shift for Nintendo, from being a hardware company to a software company,” says Bryan Buskas, chief customer officer at AdColony, a division of Opera Mediaworks, where he oversees $250 million-plus in revenue from gaming companies. Closer to Silicon Valley, Google and Apple are likely to benefit from the popularity of the game. They operate the app stores from which the free game is downloaded. Tuesday, Pokemon was No. 1 on the Apple Store and Google Play, and had been since its Thursday launch. Google benefits twofold: through its investment in Niantic, which spun out from Google last year, and the mainstream adoption of outdoor mapping technology and augmented reality, says Jan Dawson, Jackdaw Research’s chief analyst. “AR crossed over into the mainstream,” he says.
Amazon’s Prime Day has deals aplenty, little buzz Brett Molina and Elizabeth Weise @brettmolina23, @eweise USA TODAY
Amazon’s second annual Prime Day started with a checkout glitch, then turned into a more typical retail sales blitz, teasing online shoppers with a diet of discounted items from wacky to basic. The end result was little drama and also little buzz but estimates of brisk sales for the Seattle online retail giant. “I haven’t heard much reaction from people this year, and I think that in itself is telling. Going through Facebook, nobody’s bragging about the deals they’ve gotten,” said Marlene Morris Towns, a professor of marketing at Georgetown’s McDonough SAN FRANCISCO
School of Business. Still, the end result was likely just what Amazon hoped for — a marketing splash that encouraged more people to try its Prime membership. Amazon revealed the quantities of sales sold but no overall sales figures. For instance: More than 22,000 TVs were ordered in the U.S. within the first eight hours of the sale, according to Amazon. By noon Seattle time, Prime members in the U.S. had purchased more than 91,000 Instant Pots pressure cookers and all 23,000 iRobot Roombas the site had for sale. In the first 10 hours, members ordered more than 11,000 copies of the game Exploding Kittens. There didn’t seem to be a huge jump in sales compared with last year, however. U.S. Prime Day sales were in
AMAZON
line with Prime Day 2015 as of 5 p.m. ET, according to ChannelAdvisor, an e-commerce software company that works with about 3,000 online retailers, including marketplaces such as Amazon. “It looks like Amazon has spread out the deals more,” ChannelAdvisor executive chairman Scot Wingo said. Whether or not Prime Day makes a profit is beside the point,
said Charlie O’Shea, lead retail analyst with Moody’s. “You’re going to get sales today, but you’re hoping to get loyalty later. And when (customers) come back, that’s when you’ll make your money.” By offering a slew of deals and a free, 30-day Prime trial membership, Amazon hopes to convert the uninitiated into members.
Prime customers are vital to Amazon’s bottom line because they are lucrative, spending on average about $1,200 per year, compared with about $500 per year for non-members, according to Consumer Intelligence Research Partners in Chicago. The strategy seems to work well. According to CIRP, 73% of 30-day trial subscribers go on to pay for a full year of Amazon Prime membership and 91% of first-year paid subscribers renew for a second. Amazon also benefits in less obvious ways. Prime Day acts as a Black Friday test run, said Steve Osburn, chief supply chain strategist for consulting firm Kurt Salmon. Tuesday, Amazon stock closed down 0.74% at $748.21. Contributing: Hadley Malcolm