The S&P 500 (SNPINDEX:^GSPC) closed at a record high of 3,039.42 on Monday, up more than half a percent as companies reported earnings gains and investor optimism for a resolution of trade conflicts grew. The Dow Jones Industrial Average (DJINDICES:^DJI) also rose. The technology and communication services sectors led the market ahead of some important earnings reports.
Today's stock market
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Investors like AT&T's plans
AT&T reported mixed results for its third quarter, but presented a three-year capital allocation plan that was influenced by Elliott Management. The new road map received a warm reception from investors, and shares rose 4.3%. Revenue fell 2.5% to $44.6 billion, missing expectations for $45 billion. Earnings per share dropped $0.15 to $0.50, but on an adjusted basis climbed 4.4% to $0.94, $0.01 more than analysts were expecting.
The media giant continues to lose wireline and premium TV subscribers, but new wireless subscriptions and growth in AT&T fiber are helping to offset losses. The company also expects a boost when it unveils its HBO Max streaming service tomorrow.
AT&T announced plans to retire 70% of the shares it issued in the acquisition of Time Warner and to pay down all the additional debt it took on in the deal. Looking ahead to 2022, the company expects its dividend and share buybacks to yield shareholders about 8.5% per year, with EPS growth that would boost returns into double digits. It gave guidance for adjusted 2022 EPS of between $4.50 and $4.80, 32% above its projection for 2019.
That outlook, plus plans for new directors and a replacement for CEO Randall Stephenson after 2020, had investors applauding today.
Tiffany jumps on buyout offer
Tiffany investors received a nice gift today after the company confirmed it's received a buyout offer worth $14.6 billion from French luxury giant LVMH Moet Hennessy. Shares soared 31.6% to $129.72. The company said that the bid was an unsolicited, non-binding offer for $120 per share in cash.
LVMH acknowledged the deal in a terse press release but both companies are staying tight-lipped, which could indicate that acceptance of the opening offer is not at all a certainty. The fact that Tiffany stock closed well above LVMH's bid indicates that investors believe that the deal will eventually close with a higher price tag. In fact, various analysts weighed in after the news broke, with some suggesting that the company could be worth as much as $180 per share.