On The Fly: Top stock stories at midday

The S&P opened in negative territory as the week began with the Justice Department indictment of former Trump campaign chairman Paul Manafort. The weakness in the major averages worsened following a report that the House tax-writing committee is discussing a gradual phase-in for the cut of the corporate tax-rate to 20%, as President Donald Trump has been aggressively pursuing. ECONOMIC EVENTS: In the U.S., personal income rose 0.4% in September, as expected, and spending climbed 1.0%, which was a bit more growth than forecast. The Dallas Fed’s manufacturing index surged 6.3 points to 27.6 in October, marking its highest reading since March 2006. COMPANY NEWS: It was a “merger Monday” as a number of big deals were announced across homebuilding, power generation and for-profit education. Lennar (LEN) and CalAtlantic (CAA) announced a transaction valued at approximately $9.3B, including $3.6B of net debt assumed, to combine and create the nation’s largest homebuilder. Vistra Energy (VST) and Dynegy (DYN) announced a definitive merger agreement to form an integrated power company projected to have a combined market capitalization in excess of $10B and a combined enterprise value greater than $20B. Strayer Education (STRA) and Capella Education (CPLA) announced a deal to combine in an all-stock merger of equals, with Strayer to be the remaining corporate entity under which both universities will operate. Additionally, Novartis (NVS) announced a memorandum of understanding to commence a tender offer for 100% of the share capital of Advanced Accelerator Applications (AAAP) at a price of $82 per American Depositary Share, valuing AAA’s equity at $3.9B. MAJOR MOVERS: Among the notable gainers was Adamas (ADMS), which jumped 20% after Evercore ISI analyst Josh Schimmer started the stock with an Outperform rating and $85 price target, saying he finds it “inexplicable” that the closest benchmark companies have valuations that are 5 to 13 times higher than Adamas’ “modest” market cap. Also higher was Endo (ENDP), which gained 4.5% following its earnings report. Among the noteworthy losers was Merck (MRK), which dropped 6% after the company announced it is withdrawing its European application for a combination regimen featuring Keytruda, the company’s cancer immunotherapy drug. Also lower was AMD (AMD), which fell 8% after Morgan Stanley analyst Joseph Moore downgraded the stock to Underweight from Equal Weight, citing expectations for cryptocurrency gains to gradually fade from here, consoles to decline and graphics to be “flattish.” INDEXES: Near midday, the Dow was down 95.33, or 0.41%, to 23,338.86, the Nasdaq was down 20.43, or 0.3%, to 6,680.83, and the S&P 500 was down 11.82, or 0.46%, to 2,569.25.