Whatever Wall Street was drinking on St. Patty's Day, it did the trick. Investors didn't seem to care that more than 90% of Crimeans voted to quit Ukraine and join Russia. It didn't matter that the U.S. responded with an highly expected fresh round of economic sanctions on Russia in response. Instead, Wall Street drank Guinness and powered the Dow Jones Industrial Average (DJINDICES:^DJI) up 182 points Monday for its biggest win in two weeks.
1. Alibaba prepares for its U.S. IPO
Alibaba is the Chinese company in control of 80% of e-commerce in the People's Republic, and it's planning its initial public offering. The second biggest Internet company by market value (behind Google) is choosing the USA as its stock homeland, according to reports. Heck, yeah.
You've heard about conglomerates that have their hands every market imaginable (General Electric comes to mind -- the only microwave oven/jet engines producer out there). Alibaba is changing the game in China as the first ever Internet conglomerate. Part eBay, part Amazon.com, and part YouTube, this behemoth company is the website of choice for Chinese e-consumers 80% of the time, every time.
Top investment bankers are currently wooing Alibaba management, which gets to sit back and select the sexiest offer Wall Street's got. Six investment banks are competing to manage the massive issuance of stock onto the public stock exchanges. Alibaba will gain access to investors hungry for Chinese e-commerce profits and is expected to raise up to $15 billion of fresh capital. The investment bank chosen as "left-lead" is sure to earn tens of millions by managing the smooth transaction (let's hope it doesn't have a "Facebotched" IPO).
How did this affect U.S. markets? Besides getting everyone super excited about a blockbuster deal for this summer, Yahoo! (NASDAQ:YHOO) stock jumped 4%, since it owns 24% of the company. The veteran Internet company will get a big payoff when it can finally cash in on its 2005 investment.
2. Hertz rumored to consider selling its equipment rental unit
It's not a hertz doughnut, but investors traded up stock of the Hertz (NYSE:HTZ) rental company on rumors that it could announce this week that it's "spinning off" its heavy equipment rental business.
What's a spin-off? Imagine if Sea World "let free" one of its whales. That's a spin-off. Hertz is thinking about separating its truck and heavy equipment rental business from the rest of the more profitable car rental company, because the two just don't sit well together with investors. Cars are fast, sexy, and profitable. Trucks are slow and are weighing down the company (literally).
Investors bought Hertz stock Monday and drove the price 4.8% higher. If this divestiture of the truck business happens, the two separated companies will be more efficient and focused. Right now Wall Street just knows that the two business don't belong together, so it was a thumbs-up bit of news.
3. U.S. industrial production jumps by most in six months
The number of the day is 0.8%. That's how much US industrial production jumped in February, its biggest rise since August, according to the Federal Reserve Bank. The eagerly anticipated econ report is based on the central bank's monthly index of manufacturing, mining, electric, and gas companies.
Out with the cold and in with the new. During January, investors were smacked by a series of surprisingly poor econ reports that showed a sudden slowdown in the recovery's momentum that had been improving over 2013. The reason? The absurdly cold winter this year, discouraging consumers from shoveling out of their driveways to make economy-driving purchases.
The takeaway is that last month, the Fed confirmed that Mother Nature was behind the economy's sudden New Year's dip. So investors were pumped Monday after February's industrial production numbers as a sign that the seasonally affected data is finally thawing out.
- The Fed's two-day policy meeting begins
- Quarterly earnings reports: Oracle
As originally published on MarketSnacks.com