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Stock Action: Housing Names and Small Caps Lag


Today's financial recap and tomorrow's financial outlook.

It was an active day on the deal front.

Discount retailer Dollar Tree (NASDAQ:DLTR) announced it is acquiring rival Family Dollar Stores (NYSE:FDO) for $8.5 billion. The combined company will have over 13,000 stores.

And as was rumored last week, online real estate company Zillow (NYSE:Z) said it is buying Trulia (NASDAQ:TRLA) for $3.5 billion.

Both acquisition targets rose sharply on the news.

On a related note, Thomson Reuters said that global mergers & acquisition volume has hit $1.75 trillion this year, up 75% year-to-date. This is the strongest level of activity since 2007.

In US economics, June Pending Home Sales fell 1.1%, which was worse than the -0.5% consensus. Last month's figure was also revised down by a small margin. In reaction, housing stocks suffered, with the iShares Dow Jones US Home Construction ETF (NYSEARCA:ITB) dropping 1.3%.

The broader market action was mixed today. The S&P 500 (INDEXSP:.INX) was flat. However, the small cap Russell 2000 (INDEXRUSSELL:RUT), which is considered a gauge of investors' risk-friendliness, was down 0.5%.

Despite the United Nations Security Council's call for a cease-fire, Israeli air strikes and Palestinian rocket attacks continued Monday.

Over the weekend, the US released images supporting claims that Russia is firing rockets into Ukraine. Russia challenged the authenticity of the evidence.

In other Russian news, an international court in the Hague ordered Russia to pay $50 billion  to shareholders of oil company Yukos, which was seized by the Kremlin. Russia said it will appeal the decision.

The Ruble fell against the US dollar, and Russian equities were down substantially, with the Market Vector Russia ETF Trust (NYSEARCA:RSX) dropping 1.1%.

In earnings news, Tyson Foods (NYSE:TSN) rose 2.6% today on its strong revenues. The company also announced the sale of its chicken operations in Mexico and Brazil.

Cummins Engine (NYSE:CMI) beat consensus estimates on the top and bottom lines, but the stock sold off.

Monday's Financial Outlook

At 9:00 a.m. ET, the May Case-Shiller 20-City Index report will be released, followed by July Consumer Confidence at 10:00 a.m. ET.

There are also quite a few earnings reports on tap. Big names delivering their numbers include Twitter (NASDAQ:TWTR), Archer-Daniels Midland (NYSE:ADM), BP (NYSE:BP), and American Express (NYSE:AXP).

Twitter: @Minyanville

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