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Market Update

Wall Street Halts Rally as IMF Lowers Growth Estimate

Author: Nichole Harper
Last Update: 3:47 PM ET October 06 2015

[3:45 PM New York City, New York Stocks struggled on Wall Street after the IMF lowered global economic growth outlook for the second time this year and the rally in oil extended to third day in a row. Biotech companies remained under pressure as politicians look for ways to rein runaway price inflation.

Investors on Wall Street focused on the ongoing rout in healthcare stocks after the trade deficit widened in August, oil extended gains for the third day in a row and an IMF raised the prospect of a global growth slowdown.

U.S. trade deficit in August widened $6.5 billion to $48.3 billion from the revised $41.8 billion in July.

Exports in August declined $3.7 billion but imports jumped $2.8 billion from July, the Department of Commerce said.

The International Monetary Fund lowered its global estimate of growth again this year, largely on the weakening commodities prices and a slowdown in China.

On Wall Street, Tollbooth Strategy Index slipped 58.82 or 0.6% to 10,422.74.

S&P 500 index slipped 10.8 or 0.5% to 1,976.66 and the Nasdaq Composite Index dropped 54.25 or 1.1% to 4,727.14.

Crude oil in New York rose $1.91 to $48.17 a barrel and gold soared $12.82 to $1,148.57 an ounce.

U.S. Movers

AmerisourceBergen Corp slipped 1.3% or $1.22 to $93.81 after the pharmaceutical service provider agreed to acquire its rival PharMEDium Healthcare Holdings Inc for about $2.58 billion in cash from a private equity firm Clayton, Dubilier & Rice.

The transaction is expected to close by the end of this year.

PepsiCo, Inc (PEP) gained 1.8% or $1.73 to $97.54 after the food and beverage maker reported revenues in the third-quarter ending on September 5 declined 5% from a year ago to $16.33 billion.

Net income in the quarter tumbled 73% to $533 million or 36 cents per diluted share compared to $2.01 billion or $1.32 from the same quarter last year.

PepsiCo lifted earnings per share forecast for the year to about 9% form the earlier estimate of 8% and plans to return $9 billion to shareholders through $4 billion in dividends and share repurchases of about $5 billion in fiscal 2015.

Skyworks Solutions Inc (SWKS) declined 7.6% or $6.23 to $75.64 after the chipmaker agreed to acquire smaller rival PMC-Sierra Inc. for about for $10.50 per share or $2 billion in cash.

Under the terms, stockholders of PMC will receive $10.50 in cash per share, a 37% premium to the closing price of October 5.

The transaction is expected to close in the first-half of fiscal 2016.

The company forecasted revenue for the fiscal fourth-quarter of 2015 of about $880 million and non-GAAP diluted earnings per share of about $1.52.
European Markets

In London trading, FTSE 100 index increased 30.65 or 0.5% to 6,331 and in Frankfurt the DAX index rose 72.43 or 0.7% to 9,890.38.

In Paris, CAC 40 index gained 37.81 or 0.8% to 4,654.29.

BTG Plc tumbled 9.3% to 601.50 after the U.K.-based specialist healthcare company anticipated group revenue for the full-year will be near the lower end of estimated range of 410 million to 440 million.

For the first-half ending in September, the company forecasted specialty pharmaceuticals revenue will be similar to the same period a year ago while revenues in licensing segment will be single digit percentage growth from the prior year.

Ted Baker Plc dropped 2.5% to 3,196 pence after the U.K.-based fashion brand apparels retailer said sale in the first-half ending on August 15soared 24.5% from a year ago to 226.8 million.

Profit in the period surged 14.9% from a year ago to 13.1 million compared to 11.4 million and diluted earning per share increased to 29.4 pence from 25.8 pence.

Vivendi SA increased 2.1% to 21.39 after the media and pay-television operator increased its stake in Italy-based Telecom Italia SpA for the second time in a month and now holds 19.9% for a total acquisition price of about 3.05 billion.

Asian Markets

Nikkei average in Tokyo closed up 1% for the second day in a row and the yen traded above 120-mark against the U.S. dollar.

Stocks in Tokyo gained and the Nikkei average added 1% and extended rally and investors focused on the corporate earnings news.

Market indexes in Tokyo advanced for the second day as more investors step up to increase stock exposure on the growing belief that the U.S. Fed will delay rate increase till 2016.

In addition, the basic agreement on the Trans-Pacific Partnership trade pact after years of discussion supported positive market mood.

The Nikkei 225 Stock Average gained 180.61 or 1% to 18,186.10 and the broader Topix index increased 11.92 to 1,475.84.

The yen strengthened to 120.23 against a dollar.

J. Front Retailing Co Ltd edged up 0.05% to 1,994 yen after the department stores operator reported net sales in the first-half ending in August jumped 2.8% from a year ago to 573.31 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