Stocks closed higher on Wall Street on Friday, with the Dow Jones Industrials marking their sixth consecutive daily gain to close out an extremely positive week for the markets. The Dow finished the week up almost 400 points, and much of the gain came in the aftermath of the Federal Open Market Committee's decision not to raise short-term interest rates.
Even though the Fed cited some concerns about the global economy, U.S. investors seem happy with local economic strength. Yet there were still some stocks that didn't participate in the rally, and among them were Columbia Pipeline Partners (NYSE: CPPL), Transocean (RIG -1.65%), and Microsoft (MSFT -0.09%).
Columbia Pipeline Partners sagged 19% in what many might have seen as a completely counterintuitive reaction to a merger and acquisition deal. Canadian pipeline giant TransCanada said that it would acquire the master limited partnership's corporate general partner, Columbia Pipeline, in a deal worth about $13 billion.
Ordinarily, it would be natural to think that an MLP would end up enjoying some of the share-price benefits that shareholders in the general partner saw following the buyout bid. But TransCanada's press release said that Columbia Pipeline Partners units will continue to trade separately, even though TransCanada also has an affiliated master limited partnership of its own that could eventually end up as part of a merged structure. In addition, some analysts believe that investors might be responding to the fact that benefits that the TransCanada MLP's bondholders will get from a potential combination could come at the detriment of Columbia Pipeline Partners investors.
Transocean fell 8%, which was the biggest loss among stocks in the S&P 500 Friday. Oil prices fell back slightly from Thursday's rally, closing just above $41 per barrel, and that might have been a contributing factor in pulling Transocean shares downward.
Offshore drilling requires higher-priced oil than many comparable land-based projects, and so Transocean really needs to see sustained increases back toward much higher crude-oil price levels in order to maximize the value of its drilling services. A court victory in a lawsuit from shareholders alleging deceptive comments in conjunction with Transocean's merger with GlobalSantaFe provided some upward support earlier in the week, but the bigger fundamental question Transocean faces is whether its exploration and production company clients will restart projects that they deferred in light of a poor pricing environment for energy.
Finally, Microsoft was the worst performer in the Dow, falling just more than 2%. Most of the discussion about the tech giant centered on an afterparty at the company's Game Developer Conference in San Francisco, which apparently included professional dancers in questionable attire.
Many developers complained that the performance was sexist, effectively thwarting their attempts to try to draw in more females to the developer community. Even some internal Microsoft personnel criticized the event, and investors need to expect that the company will have to do some damage control in order to reestablish its commitment to uphold higher standards in the gaming community.