Stocks Clinch Records, E*Trade Finds a Buyer and Walmart Disappoints
February 21 2020 - 7:29AM
Dow Jones News
By Paul Vigna
The stock market set records again this week, but investors
faced new concerns as well. Apple Inc. warned its sales would take
a hit from the coronavirus epidemic, and it is becoming clearer
that China's gross domestic product will suffer, too. It is shaping
up to be a down week for Wall Street.
Here is a look at some of the biggest winners -- and losers --
in the market.
WINNER: E*Trade
Investors who wanted to tap the stock market moneymaking machine
but couldn't afford to pay for one of those fancy, white-shoe Wall
Street firms could turn to a discount broker like E*Trade Financial
Corp. Now, Wall Street is turning to E*Trade, too.
Morgan Stanley on Thursday agreed to acquire E*Trade for $13
billion in stock, in what would be the largest deal by one of the
big U.S. banks since the financial crisis in 2008. Shares of
E*Trade surged as much as 27% on the news, their largest one-day
gain since 2009.
For E*Trade, the attraction was obvious. Its main rivals,
Charles Schwab Corp. and TD Ameritrade Holding Corp., agreed to a
merger last fall. E*Trade was the odd man out. There were doubts
about its ability to go it alone. The company didn't want to wait
around to see what happened.
Morgan Stanley didn't blithely decide to dilute its shareholders
by $13 billion, though. The deal will make the other House of
Morgan the biggest wealth manager in the world, with $3 trillion in
assets under management. Morgan Stanley is adhering to one of the
best-known axioms in corporate America: When you can't create
growth on your own, you have to go out and buy it.
This deal is just the latest sign that, for all the stock-market
records, Wall Street isn't a growth industry these days. The deal
will ramp up pressure on some of Morgan Stanley's competitors like
Goldman Sachs Group Inc.
Honorable Mentions: Members Exchange, a startup looking to
launch a rival to the New York Stock Exchange and Nasdaq Inc., said
it completed a funding round that included investments from Wall
Street heavy hitters Goldman Sachs and JPMorgan Chase & Co. It
is a sign that some of the Big Board's big clients are also looking
for ways to dilute the dominance of the incumbent exchanges.
Goldbugs: Gold futures rose above $1,600 an ounce, hitting their
highest point in seven years, as some investors look for havens in
expectation that the coronavirus outbreak will have a bigger
economic impact than currently expected.
LOSER: Retailers
Every time you see one of those blue Amazon delivery trucks, it
is another body blow to the bricks-and-mortar retailer. That was
made clear this week after Walmart Inc., the world's largest
retailer, posted sluggish holiday-sales numbers.
It isn't that Walmart lacks an online strategy. Its online
holiday sales did indeed rise. But that couldn't offset the fact
that fewer people are getting in their cars and doing their own
shopping.
Meanwhile, Pier 1 Imports Inc. finally threw in the towel. And
the wicker chairs. And the elephant-theme umbrella holders. The
funky home-goods retailer filed for bankruptcy protection Monday,
after years of trying to reinvent itself in a changing retail
landscape. Under its new plan, it will sell off the company, either
in whole or in parts.
Honorable Mention: Speaking of the lack of growth in the
financial markets, 35,000 or so U.S. and European staffers at HSBC
Holdings PLC are going to lose their jobs in the latest part of the
big bank's retrenchment. Once upon a time, HSBC had ambitions to be
a major global bank. Now it is narrowing its ambitions.
Next Week: Speaking of retailers, next week brings more earnings
reports, and retailers are in the spotlight. Look for reports from
Home Depot Inc. and Macy's Inc. (Tuesday), L Brands Inc.
(Wednesday) and Beyond Meat Inc. (Thursday).
On the economic front, a clutch of reports will provide new
insights into the health of the U.S. consumer and the economy. Look
for new-home sales (Wednesday), the second report on fourth-quarter
GDP (Thursday) and personal income and spending (Friday).
Write to Paul Vigna at paul.vigna@wsj.com
(END) Dow Jones Newswires
February 21, 2020 07:14 ET (12:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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