U.S. stock markets continued their recent bounce today, after the European Central Bank (ECB) said it will begin making monthly bond purchases of $70 billion starting in March and continuing through September 2016. This exceeded the Street’s forecast of $50 billion over 12 months.
In addition, the ECB left interest rates unchanged. Also boosting the markets was a 10,000-person drop in the number of Americans filing for unemployment benefits last week.
There was a decoupling of stocks from the oil market, as crude oil dropped another 2% after the Energy Information Administration (EIA) reported the largest build-up of crude oil in 14 years.
High-flying sectors were diversified today, including technology, financials, cyclical consumer goods and industrials.
By the end of the day, the Dow Jones Industrial Average and the S&P 500 were up 1.5%, and the Nasdaq Composite rose nearly 1.8%. It was a good day for most stocks, but three that stood out in particular as today’s best were Dollar Tree, Inc. (NASDAQ:DLTR), Avon Products, Inc. (NYSE:AVP), and Cree, Inc. (NASDAQ:CREE).
Dollar Tree, Inc. (DLTR)
The pressure from Dollar Tree on Family Dollar Stores, Inc. (NYSE:FDO) seems to have paid off. As we reported recently, CEO Bob Sasser this month said that FDO executives must vote at today’s shareholder meeting on the company’s proposed merger with Dollar Tree.
The pressure worked and today, FDO announced it had agreed to the $8.7-billion merger with DLTR, putting an end to speculation that the FDO merger might go through with rival Dollar General Corp. (NYSE:DG).
The announced deal may close as early as March. DLTR stock was up 3.6% today on 8.5 million shares, and is approaching recent highs.
Avon Products, Inc. (AVP)
The last 12 months have been brutal for AVP stock, having fallen more than 50%, as sales languished overseas, allegations of bribery were made in China, and a $135 million settlement was reached with regulators over violations of the Foreign Corrupt Practices Act (FCPA). Severe company layoffs have occurred, and the company’s credit rating has recently been lowered to junk.
But AVP stock rocketed higher today on a report that the longstanding cosmetics company is in private talks with TPG Capital, a private equity company, about a possible sale or merger. Company officials are not talking, but the stock was up more than 14% on strong volume of 42.2 million shares.
Cree, Inc. (CREE)
Cree stock bolted up 8% today after posting second quarter earnings of 33 cents per share, well above analysts’ expectations of 21 cents per share. Revenue of $413.2 million also nicely exceeded the Street’s expectations of $404.4 million.
Cree executives said the LED lighting products maker made solid progress this quarter, with improvements in operating and gross margins.
CREE has been trading sideways between $30 and $36 per share for several months now, so perhaps this is the news needed to break through that pattern going forward.
As of this writing, Ethan Roberts did not hold any positions in the aforementioned securities.
