After attempting to rebound early Monday morning, U.S. stocks extended last week's losses as investors continued to digest a torrent of fresh corporate earnings news. When the closing bell rang, both the Dow Jones Industrial Average (^DJI 0.40%) and the S&P 500 (^GSPC 1.02%) had fallen close to 1%.
Today's stock market
| Index | Percentage Change | Point Change |
|---|---|---|
| Dow | (0.99%) | (245.39) |
| S&P 500 | (0.66%) | (17.44) |
Data source: Yahoo! Finance.
Tech stocks led the broader market lower, with the Technology Select Sector SPDR Fund (XLK 1.13%) dropping 1.7%. But strength in leading consumer goods names helped dampen those losses, with the Consumer Staples Select Sector SPDR ETF (XLP -0.21%) gaining 1.2%.
As for individual stocks, Ford (F -1.92%) rallied following some kind words from Wall Street, while Red Hat (RHT) skyrocketed after it agreed to be acquired.
Image source: Getty Images.
Could Ford stock climb more than 30%?
Shares of Ford jumped as much as 6.8% early this morning, then settled to close up 3.3% after Goldman Sachs analyst David Tamberrino upgraded the stock from neutral to buy. He also raised his per-share price target on the automaker from $9 to $12, marking a nearly 34% premium from Friday's closing price -- and that doesn't even include Ford's hefty dividend, which offers an annual yield of 6.5% as of this writing.
To justify his relative bullishness, Tamberrino argued that while Ford's earnings will likely remain under pressure into next year, "the combination of a refreshed product cadence globally as well as cost improvements from strategic initiatives will begin to take hold."
The timing of the positive call is no coincidence. Ford shares also popped last week after the company posted solid third-quarter earnings, reiterated its full-year outlook, and appeased investors' concerns over its ongoing restructuring initiatives.
Red Hat finds a buyer
Red Hat stock soared 45.4% after IBM (IBM -1.05%) agreed to acquire the open-source cloud software leader for $190 per share in cash, good for a total enterprise value of roughly $34 billion. Shares of IBM declined 4.1% on the news.
IBM Chairman and CEO Ginni Rometty called the purchase a "game-changer."
"It changes everything about the cloud market," Rometty added. "IBM will become the world's #1 hybrid cloud provider, offering companies the only open source cloud solution that will unlock the full value of the cloud for their businesses."
Of course, the deal isn't terribly surprising considering IBM and Red Hat have worked closely for over two decades, particularly with Big Blue offering its support of Red Hat's Linux operating system in its early stages.
As such, it's equally unsurprising that IBM has promised to preserve "the independence and neutrality of Red Hat's open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture." This also means maintaining Red Hat's current management team and operating facilities.
As it stands, the acquisition has already been approved by both companies' boards of directors, but it still needs to pass regulatory muster and secure the approval of Red Hat shareholders. Assuming all goes as planned, it should close in the second half of 2019.
