US FINANCIAL MARKET
U.S. Stocks Advance at the Open as Concerns Ease Over Ukraine and Iraq
- U.S. stocks rose as diplomats from Ukraine and Russia discussed a possible truce and Kurdish forces made progress against militants in Iraq.
- Dollar General surged 9.1 percent after offering $9.7 billion for Family Dollar Stores. Family Dollar rallied 4.7 percent.
- Ukrainian Foreign Minister Pavlo Klimkin met his Russian counterpart Sergei Lavrov for more than five hours of talks in Berlin.
- Iraqi and Kurdish forces retook control of the Mosul Dam.
Federated Investors sees S&P 500 at 2,500 in two years: Barron’s
- The S&P 500 could hit 2,500 within the next 18 months to two years, Barron’s reported on Sunday, citing its interview with Stephen Auth, CEO, equities at Federated Investors.
- The Federated CIO sees the S&P 500 reaching 2,100 points at the end of the year.
- He estimated that equities are trading at a 50 percent discount to bonds.
- Auth oversees a staff that runs about $50 billion in assets.
- A robust U.S. economy growing at an annual rate of 3.5 percent to 4.0 percent should help the S&P 500 achieve the 2,500 milestone, about 30 percent higher than its current level of around 1,955 points.
- He cited the improving trend in the labor market as well as growth in the underlying private economy, which has been growing at 3 percent over the last three years.
- Auth also said he expects the energy sector to create a “manufacturing renaissance” because of lower costs.
- The S&P 500 fell as much as 3.9 percent from a record reached on July 24 amid growing concern over global conflicts from Ukraine to Gaza and Iraq.
- The benchmark index gained 1.2 percent last week as signs of a slowing economy stoked bets central banks will leave interest rates near record lows for longer.
- Reports showed the euro area’s recovery stalled in the second quarter.
- In the U.S., July retail sales registered the worst performance in six months, jobless claims rose more than forecast and consumer sentiment slipped.
- The Federal Reserve will release minutes from its July meeting on Aug. 20 this week.
- The following day, the Fed Bank of Kansas City begins its annual symposium in Jackson Hole, Wyoming, where leading economists and central bankers will discuss the outlook for the economy and monetary policy.
- Previous conferences there have foreshadowed some of the Fed’s biggest policy shifts since the financial crisis.
Tesla boosts model S Sedan’s warranty coverage after criticism
- Tesla announced that the drive unit warranty on the Model S has been increased to match that of the battery pack, bringing its coverage to eight years and “infinite” miles.
- The warranty extension will apply retroactively to all Model S cars produced since 2012.
Dollar General Makes $9.7 Billion Family Dollar Counterbid
- Dollar General plans to pay $78.50 a share in cash, compared with Dollar Tree’s bid of $74.50 a share in cash and stock.
- The deal will generate $550 million to $600 million in cost savings annually three years after its completion, Dollar General said.
- Family Dollarand Dollar Tree are the No. 2 and No. 3 dollar-store chains by number of outlets, while Dollar General is the largest.
- Wal-Mart is spending $600 million this year to add more Neighborhood Market and Express stores, aiming to get a larger piece of the neighborhood discount market.
P&G eyes Duracell, Braun in sweeping brand culling
- Procter & Gamble is working with advisors including Goldman Sachs to review up to 100 underperforming brands for potential divestiture.
- While P&G has yet to determine which brands it will seek to shed, Duracell batteries and Braun shavers are the two largest assets likely to be divested.
- The company, which also makes Gillette razors and Tide detergent, said this month it would consider selling more than half its brands whose sales have been declining for the past three years, a drastic attempt to revive growth and save costs.
US ECONOMY & POLITICS
Homebuilders rally after strong NAHB sentiment data
- The NAHB/Wells Fargo Housing Market index rose to 55 in August from 53 in July.
- Readings below 50 mean more builders view market conditions as poor than favorable.
College Tuition Costs Soar: Chart of the Day
- The cost of higher education has jumped more than 13-fold in records dating to 1978.
- Recent college graduates might be questioning whether they’re getting what they paid for.
- Unemployment among those 25-to 34-years old rose to 6.6 percent in July, exceeding the 6.2 percent rate for all groups.
- The jobless rate for that age group averaged 5 percent in the four years leading up to the last recession.
Cost of Raising Child Climbs at Slowest Pace Since 2009
- The cost for a middle-income family to raise a child born last year to age 18 is $245,340, a 1.8 percent increase from the previous year.
- Housing was the largest expense at 30 percent.
- For typical two-child, two-parent families with income from $61,530 to $106,540 before tax, annual spending on each child was $12,800 to $14,970 last year.
- A family earning less than $61,530 a year before taxes will probably spend $176,550 in 2013 dollars, while parents earning more than $106,540 may pay $407,820 to age 18, according to the study.
EUROPE & WORLD
Iraq’s Kurds Seize Most of Largest Dam after U.S. Strikes
- The U.S. widened its airstrikes over the weekend and used bombers for the first time since the offensive began on Aug. 8 to help secure the dam near Mosul, Iraq’s largest northern city.
- The dam had been seized by the insurgents.
TODAY in HISTORY
- Mongol conqueror Genghis Khan died in China (1227)
- Virginia Dare became the first child of English parents born in North America (1587)
- Congress established the Bureau of Immigration, forerunner of the Immigration and Naturalization Service (1894)
- James Meredith became the first African American to graduate from the University of Mississippi (1963)
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