U.S. Stocks Finish in Red Territory
For the sixth straight session, the Dow Jones Industrial Average fell on Tuesday. The blue-chip index dropped 287.26 points (-1.2%) as industrial stocks reeled from the escalating trade tensions between the U.S. and China. It’s the longest skid for the Dow since March 2017 and the string of losses erased all of the gains in 2018.
The broader S&P 500 Index and the tech-heavy Nasdaq Composite Index shed 11.18 points (-0.4%) and 21.44 points (-0.3%) respectively. Only the defensive sectors like telecommunications (+1.4%), utilities (+1.1%), consumer staples (+0.5%), and real estate (less than +0.1%) finished higher.
General Electric Loses Dow Jones Slot
General Electric Co. (GE) will be booted out of the Dow Jones Industrial Average effective June 26, 2018. The iconic American industrial conglomerate will be replaced by Walgreens Boots Alliance Inc. (WBA).
The change ends the tenure of the only remaining original component of the blue-chip index. It comes after more than a century. The price of GE shares has dropped more than half in the past year. David Blitzer of S&P Dow Jones Indices said the change would make the Dow a “better measure of the economy and the stock market”.
Fox Board to Decide on Comcast Offer
The board of directors of Twenty-First Century Fox Inc. (FOX A)will meet on Wednesday to decide whether to entertain Comcast Corp’s. (CMCSA) $65 billion all-cash offer or honor the $52 billion all-stock bid from Walt Disney Co. (DIS).
According to analysts and industry sources, while the Fox board has yet to make a decision, the Comcast offer could potentially lead to a better deal for Fox shareholders if Disney doesn’t outbid them. Disney and Comcast need the Fox assets because it’s a way to expand and compete with online video streaming giant Netflix Inc. (NFLX).
Starbucks to Close Non-Performing Stores
Starbucks Inc. (SBUX) will begin closing poorly performing company-operated stores next year. The number could reach as many as 150. Most of the identified stores are those situated in urban areas that are thickly populated with Starbucks branches. SBUX fell 3.5% in after-hours trading on Tuesday.
CEO Kevin Johnson said, “Our recent performance does not reflect the potential of our exceptional brand and is not acceptable.” He added, “We must move faster to address the more rapidly changing preferences and needs of our customers.”
Ford and Volkswagen Eyes Strategic Alliance
Two giants in the automotive space are “exploring a strategic alliance” but could be significant for both. Ford Motor Co. (F) and Volkswagen (OTC: VLKAF) said they can work on potential projects without taking any stake in each other. The alliance would be to develop of a range of commercial vehicles.