Stocks Ended Narrowly Mixed

Published on Monday, 27 August 2012 17:56 Written by Christopher Lynn

New York, August 27^th (TradersHuddle.com) – Stocks closed narrowly mixed after trading near the neutral line for most of the session. Participants were hesitant to commit amid the recent gains and ahead of a key speech from Ben Bernanke in Jackson Hole at the end of the week. Tropical Storm Isaac was aiming towards the Gulf of Mexico’s oil and natural gas production facilities, while Apple scored a major legal win against rival Samsung and the Android ecosystem.

The Dow Jones Industrial Average lost 33.30 points, or 0.25%. The S&P 500 index fell less than 1 point, or 0.05%, while the NASDAQ added 3.40 points, or 0.11%.

The market started in slightly negative territory, with the NASDAQ futures receiving a boost from Apple, which was trading at record highs in pre-market after the company won a key patent infringement case against Samsung. Overseas markets were weaker as data showed that China’s industrial sector posted a sharp profit drop in July. Participants were cautious in committing, as they await Fed Chairman Bernanke speech at the Jackson Hole Summit on Friday

On the S&P 500 it was a mixed bag, with materials, industrials, and consumer discretionary logged the biggest declines, while utilities, consumer staples, and technology.

M&A activity heated up on Monday, with Hertz (NYSE: HTZ) acquiring rival Dollar Thrifty (NYSE: DTG) in a deal worth $2.3 billion. Shares of Dollar Thrifty rallied 7.5% after the deal put an end to two-years worth of takeover talks. Hertz jumped more than 8%, as the deal consolidates its offering at the high, middle, and low segments of the market.

Hudson City Bancorp (NASDAQ: HCBK) surged 15.7% to $7.45 after M&T Bank (NYSE: MTB) agreed to acquire the company for $3.7 billion. Shares of M&T Bank rallied more than 4%. Shares of Hudson City logged the best percentage gain in the S&P 500. Meanwhile, International Business Machines (NYSE: IBM) lost more than 1% after it announced it would buy employment-solutions company Kenexa (NASDAQ: KNXA) for $1.3 billion. Shares of Kenexa soared 41.4% to $45.79.

Apple (NASDAQ: AAPL) gained 1.9% to $675.68 after posting a new all-time high of $68.87. The stock reacted positively after it won a $1.05 billion patent lawsuit against Samsung, the largest maker of Android smartphones and tablets. The win allows Apple to ask for the ban of sales in the U.S. of several Samsung devices that infringed on Apple’s software patents. Oppenheimer bumped its target price to $800 per share, while Needham said that the ruling would send Google to the drawing board for its Android software to work around the patents. These workarounds are likely to materially degrade the Android user experience relative to the user experience on Apple's iOS operating system, which was the whole point of the lawsuits, rather than the monetary settlement.

Separately, AllThingsDigital reported that Apple will unveil its new iPhone 5 in an event scheduled for September 12^th, while a month later it will unveil the new iPad mini, which will come with smaller screen size and lower price point.

Google (NASDAQ: GOOG) dropped 1.4% in the session, on reaction to the unfavorable ruling for Samsung, the biggest user of the Android operating system.

Also in tech land, Hewlett Packard (NYSE: HPQ) tumbled more than 2%, posting the biggest decline in the Dow Jones Industrial Average and logging a new 52-week low at $17.16. HP extended the slump from the recent session after the company lowered its outlook, following quarterly results that were largely inline with expectations.

In the consumer space, Tiffany & Co. (NYSE: TIF) rallied 7% despite missing quarterly results and slashing its fiscal year earnings and revenue guidance. The luxury jewelry retailer said that it expects to see a profit in the holiday seasons. Also in the discretionary space, Best Buy (NYSE: BBY) rallied 3.2% after the company said it has reached an agreement with founder Richard Shulze that would allow him to perform a due diligence, while forming an investment group that will attempt to take the consumer electronics retailer.

In the energy space, crude oil prices slumped, as the tropical storm Isaac moved into the Gulf of Mexico, forcing oil companies to shut down refineries ahead of the landfall. Valero Energy (NYSE: VLO) was the best performer in the sector, rallying more than 5%, as gasoline prices moved higher amid the storm disruptions and after an explosion over the weekend at a Venezuelan refinery. Gulf Coast refiners in particular saw increased bids as they are the most able to supply refined products to South America.

Elsewhere, AOL (NYSE: AOL) rallied 2.9% after it announced a one-time special dividend of $5.15 per share and said that it would buy back up to $600 million of its stock. Facebook (NASDAQ: FB) lost 1.33% to $19.15, giving back most of its gains from last week.