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Market Update

S&P 500 Turns Lower, U.S. Economy Shrank at a Slower Pace

Author: Nichole Harper
Last Update: 2:21 PM ET June 24 2015

2:00 PM – Market indexes on Wall Street traded lower and the U.S. economy shrank at a slower pace than previously estimated last month. Crude oil and gold eased. European markets declined after Greece and international lenders failed to agree on a compromise.

Stocks on Wall Street turned lower and the U.S. revised its economic growth estimate in the first quarter.

The economy contracted in the quarter but at a slower pace as the largest economy struggled with bad weather, strike at West Coast ports and sustained spending cuts in the energy sector and rising dollar.

In the revised estimate, the U.S. economy shrank at 0.2% annual in the first-quarter compared to previous estimate for 0.7% decline as reported last month. Real GDP in fourth-quarter jumped 2.2%, the Department of Commerce said.

Consumer spending growth rate was revised to grow at 2.1% pace compared to 1.8% rate reported in May. In addition, the revision in exports and imports still led to a large deficit and nearly deducted 2 percentage points from the GDP.

The economy is expected to grow between 2.0% and 3.0% in the current quarter.

On Wall Street, Tollbooth Strategy Index edged down 9.86 to 10,874.26.

S&P 500 index slid 0.2% or 3.58 to 2,120.03 and the Nasdaq Composite Index fell 3.98 to 5,156.12.

Crude oil in New York fell 0.02 cents to $60.99 a barrel and gold fell $5.20 to $1,171.40 an ounce.

U.S. Movers

3M Company (MMM) fell 11 cents to $159.73 after the industrial conglomerates agreed to acquire fall protection equipment maker Capital Safety from a private-equity firm KKR & Co LP for about $2.5 billion including debt of about $700 million.

The transaction is expected to close in the third-quarter.

Carnival Corporation (CCL) increased 2.2% or $1.08 to $50.55 after the cruise and port services provider reported revenues in the second-quarter ending in May fell 1.1% to $3.59 billion from a year ago period.

Net income in the quarter soared 126.5% to $222 million or 29 cents per diluted share compared to $98 million or 13 cents from the same quarter last year.

Netflix, Inc (NFLX) rose 2.9% or $19.86 to $701.05 after the online television streaming services provider announced that its board approved a 7-for-1 stock split as of July 14.

Last month the streaming services provider said it was in talks to begin operations in China.

European Markets

European markets struggled after Greece and international lenders failed to find a common ground and talks collapsed at the end of 2-day talks.

In London trading, FTSE 100 index edged up 6.65 to 6,842.03 and in Frankfurt the DAX index fell 0.9% or 106.41 to 11,436.63.

In Paris, CAC 40 index slipped 0.5% or 22.71 to 5,034.97.

Koninklijke Ahold N.V slipped 2.1% to €18.56 after the Netherlands-based retail group and the Belgium-based food retailer Delhaize Group SA agreed to merge to form a new entity Ahold Delhaizee.

Ahold Delhaizee, the merged new entity will have more than 6,500 stores with 375,000 associates and serve 50 million customers a week in the U.S. and Europe and is estimated to generate annual sales of about €54 billion.

The combined company will be valued at €26.07 billion or $29.11 billion.

Under the terms, Delhaize investors will receive 4.75 Ahold shares per Delhaize share and will own 39% of the combined company’s equity and the shareholders of Ahold will hold the remaining 61%.

Ahold said it will terminate its share buyback program and return €1 billion to investors through a capital return and reverse stock split before the completion of transaction.

The deal is expected to be completed by mid-2016.

Bouygues SA plunged 8.4% to €34.84 after the France-based communications and media group said its board of directors unanimously decided not to pursue the “unsolicited” proposal from European telecom company Altice SA to acquire rival Bouygues Telecom for about €10 billion or $11.4 billion.

Asian Markets

Stocks in Tokyo extended gains and the yen weakened. Konica Minolta agreed to acquire the U.S. based Radiant Vision System for 30 billion yen. Nomura Research estimated higher sales and earnings in the current fiscal year.

Market indexes in Japan closed higher but after the close Asian markets struggled after talks between Greece and international lenders collapsed.

The Nikkei 225 Stock Average gained 58.61 or 0.3% to 20,868.03 and the broader Topix index rose 3.49 to 1,679.89.

The yen closed at 123.92 against a dollar.

Nomura Research Institute Ltd slid 0.3% to 4,945 yen after the Nikkei news said information technology services provider’s net sales for the first-quarter ending in June to increase 4% to 100 billion yen and operating profit to jump 57% to 12.5 billion yen.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc