MarketView for August 20

Summary 

Monday saw another uneventful day on Wall Street with the major equity indexes virtually unchanged in a sign the some so called “market fatigue” may be setting in  after a six-week run of gains as the European Central Bank quelled speculation about the form of market intervention that may be taken to stem the region's debt crisis.

Despite the lethargic trading, Apple saw its share price reach a new high, becoming the most valuable public company of all time, with the combined value of its shares exceeding a previous record set by Microsoft. Apple ended the day up 2.6 percent to close at $665.15.

The S&P 500 remains close to a four-year high, rising nearly 5 percent in the past six weeks. Investors had been waiting for the ECB to take steps to control the euro crisis in September. Last week, the index broke away from the 1,400 level where it been for much of August.

German magazine Der Spiegel said over the weekend the ECB is considering setting interest rate thresholds for any purchases of a struggling euro zone country's bonds. A bank spokesman said it was misleading to report on decisions that still had not been taken. Germany's central bank, the Bundesbank, also reiterated its opposition to bond purchases. A spokesman for the German Finance Ministry said it was not aware of any plans for the ECB to target bond spreads.

Monday’s minimal losses on Wall Street were relatively unnoticed when compared with much steeper declines in Europe and a fall in the Shanghai index to its lowest level since 2009.

At one point during the trading day, Facebook fell more than 50 percent from its issue price to hit a new low of $18.75.

The healthcare sector was a bright spot after Aetna said it had agreed to acquire Coventry Health Care for $5.6 billion. Coventry shares rose more than 20.3 percent to $42.04 after Aetna said it will pay $41.10 per share for the company, putting the deal at about a 20 percent premium to the Coventry’s closing price this past Friday. The deal is the latest in a string of multibillion-dollar acquisitions within the healthcare sector. Aetna ended the day up 5.6 percent to close at $40.18.

Lowe's fell 5.8 percent to $26.26 after the company reported weaker-than-expected quarterly results and cut its profit outlook for the fiscal year as Lowe’s appeared to be losing market share to larger rival Home Depot.

Best Buy announced that its founder, Richard Schulze, has turned down an offer from the board to conduct due diligence in connection with his proposal to take the company private at a valuation of more than $8 billion. Best Buy ended the day down 7.9 percent to close at $18.67.

The global economic outlook is more uncertain now than at the start of the financial crisis in late 2008, Doug Oberhelman, chief executive of Caterpillar, said on Monday. Caterpillar's shares ended the day up 0.5 percent to close at $90.44.

Volume was weak in what turned out to be one of the lightest sessions in terms of volume this year as approximately 4.83 billion shares changed hands on the three major equity exchanges, a number that was well below the daily average of 6.64 billion shares.