February 23, 2018 Market Outlook

Worries over Rising Inflation, Rates, & Bond Yields Continue

The Dow Jones Industrial Average (+0.7%) and the S&P 500 (+0.1%) closed higher on Thursday following the upbeat data on the labor market which may have temporarily offset investor fears over climbing inflation and rising bond yields. But stocks ended the session well off their intraday highs as financial and health-care shares slid into negative territory towards the afternoon.

The Nasdaq Composite Index was the day’s loser, falling 8.14 points, or 0.1%, to 7,210.09. The four straight down sessions is its longest losing skid since a nine-session slide ended Nov. 4, 2016 based on the data from WSJ Market Data Group. Even though investors see an improving economy, they are displaying heightened sensitivity to the prospect of accelerated inflation, rising interest rates, and higher bond yields.

Aussie PM to Seek Infra Investment from the U.S.

While U.S. President Donald Trump promised to pour hundreds of billions of government money into upgrading US bridges and highways, developing countries across Asia and the Pacific are also in need of big investments in infrastructure from the U.S.

Australian Prime Minister Malcolm Turnbull will raise the issue with Trump when the two leaders meet in Washington on Friday. “We need trillions and trillions of dollars of additional infrastructure investment in the region,” Turnbull said Thursday.

Kylie Jenner’s Tweet Cost Snap $1.3 Billion

The tweet of one of Snapchat’s most influential users just wiped out $1.3 billion off parent-company Snap Inc.’s (SNAP) market value. Kylie Jenner is apparently displeased about Snapchat’s new redesign and tweeted the following on Wednesday, “Sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.”

SNAP dropped and closed down 6% on Thursday after the reality TV star announced she is no longer using the app.  In another tweet Jenner said, “Still love you tho snap … my first love.” Snapchat has been under fire from disgruntled users who are complaining that the app’s new layout is too confusing to navigate. About 1.2 million people have signed a petition on Change.org asking Snapchat to revert to the old design.

General Mills to Acquire Pet Food Maker Blue Buffalo

General Mills Inc. (GIS) would soon become the leader in the U.S. wholesome natural pet food category after the announcement that the Cheerios cereal maker offered to buy Blue Buffalo Pet Products Inc. (BUFF). The deal is worth for nearly $8 billion in cash as General Mills prepare to enter the fastest-growing category in the pet food market.

The two companies agreed to the price of $40 per Blue Buffalo share which represents a premium of 17.2% percent to Blue Buffalo’s Thursday closing price. BUFF shares were higher at $39.88 in premarket trading. The entry of the Minneapolis-based General Mills’ into the pet food business will also help the company offset intensifying competition in the packaged food industry.

DHL Orders Tesla Semi-Electric Trucks to Save on Diesel

DHL is the first among the many haulers looking to shift away from diesel and save tens of thousands of dollars annually. Jim Monkmeyer, president, Transportation at DHL Supply Chain, confirmed the company ordered 10 long-distance semi-electric trucks from Silicon Valley billionaire Elon Musk’s Tesla Inc. (TSLA). The company is expected to begin manufacturing the trucks in 2019.

Monkmeyer said the initial order of trucks is for a test run and that it will take longer before they switch the majority of their fleet of trucks to electric. But they are aware of the potential huge savings in shifting from diesel to electric.

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