Dow Jones Industrial Average Rises on Merger Monday

M&A Mania; Plus, The Sports Retailer Aiming for Record Highs

by Celeste Taylor

Published on Oct 24, 2016 at 12:18 PM

The Dow Jones Industrial Average (DJIA) is comfortably higher at midday, as stocks react to several rounds of big M&A news, and traders prepare for the biggest earnings week of the quarter. The Markit flash purchasing managers manufacturing index (PMI) unexpectedly rose to 53.2 in October, marking the best rate of improvement in a year. Elsewhere, traders are anticipating several Fed speeches later today, following St. Louis Fed President James Bullard's comments that interest rates will likely remain low for the next several years.

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Entertainment stock CBS Corporation (NYSE:CBS) is among the stocks with unusual put volume at midday, as media stocks turn lower on the proposed Time Warner Inc (NYSE:TWX) buyout of AT&T Inc. (NYSE:T). CBS has given up 1.5% to trade at $56.81 so far today, with puts trading at seven times their usual intraday rate, with nearly 14,000 contracts crossing the line. It looks like one trader is betting on limited momentum in the near term, possibly initiating a short straddle at the weekly 11/11 57 strike, with 5,000 call contracts and 5,000 put contracts crossing the line.

Banking stock Merchants Bancshares,Inc. (NASDAQ:MBVT) is the among the top performers on the Nasdaq, following news that MBVT will merge with Community Bank System, Inc. (NYSE:CBU) in a deal worth $304 million. The shares of MBVT, which have enjoyed the support of their 80-day moving average since mid-May, are trading up 31.1% at $43.05, giving MBVT a year-over-year gain of 41.8%. 

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Among the worst performers on the New York Stock Exchange today is oil-and-gas company Stone Energy Corporation (NYSE:SGY) which is continuing its sharp plunge, currently trading 19.1% lower at $5.10, after last week's announcement that the company may file for bankruptcy. SGY has dropped over 47% since the news broke on Thursday night. 

The CBOE Volatility Index (VIX) is down 0.3 point, or 2%, at 13.07.

Today's put/call volume ratio on the SPDR S&P 500 ETF Trust (SPY) is 1.33, with puts outpacing calls. SPY was last seen up 0.5 point, or 0.2%, at $215.02.

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