Pharmaceutical giant Bristol Myers Squibb is buying Karuna Therapeutics for $14 billion to expand its psychiatric drugs portfolio and Nike shares slumped after slashing its guidance, while investors brace for the latest inflation reading. Here’s what investors need to know today.
1. Bristol Myers Squibb Buys Karuna Therapeutics for $14 Billion
Bristol Myers Squibb (BMY) is buying drug maker Karuna Therapeutics (KRTX) for $14 billion in cash, the companies announced Friday. The deal, which is expected to close in the first half of 2024, could help Bristol Myers expand its psychiatric and neurological drugs portfolio, with Karuna notably working on an experimental schizophrenia treatment currently being reviewed by the Food and Drug Administration. Bristol Myers said it will pay $330 per share for Karuna, a 53.4% premium to its last closing price. Shares of Karuna were up 47% in pre-market trading, while Bristol Myers Squibb shares were 1.6% lower.
2. Nike Stock Falls After Slashing Its Sales Outlook
Nike (NKE) shares are down nearly 12% pre-market after lowering its sales outlook. During its fiscal year 2024 second-quarter earnings call on Thursday, the company revealed more than $2 billion in cost-cutting plans over the next three years. Nike also slashed its guidance for the fiscal year, saying it expects to grow revenue only 1%. Shares of retailers that sell Nike products such as Foot Locker (FL) and Dick’s Sporting Goods (DKS) were also down pre-market.
3. Fed’s Favored Gauge of Inflation Expected to Show Price Growth Slowing
Today’s economic reports could give investors more insight into the health of the economy. The Personal Consumption Expenditures (PCE) Price Index is the Federal Reserve’s preferred measure of inflation, and its core measure is expected to rise only 0.1% over the last month when results are released at 8:30 a.m. The Conference Board’s final estimate for December consumer sentiment will be released at 10 a.m., and is expected to remain flat at a reading of 69.4. However, if these reports are anything like others as of late, they could beat economists’ expectations and point even more toward a soft landing.
4. US President Joe Biden Takes Aim at Nipon Steel’s Purchase of US Steel
Late Thursday, President Joe Biden said the $14.9 billion deal that would see Japan’s largest steel producer purchase U.S. Steel (X) deserves “serious scrutiny.” The president expressed national security concerns about Japan’s Nipon Steel buying the U.S. steelmaker. He said that the domestic steelmaker is vital to the country’s supply chain and national security and encouraged a review by the Committee on Foreign Investment in the United States (CFIUS).
5. Government Scrutinizes Frequent Flier Programs
Shares of American (AAL), United (UAL), Delta (DAL) and Southwest (LUV) airlines were all slightly down in pre-market trading as Reuters reported the U.S. Transportation Department is investigating frequent flier programs for deceptive practices. The government is reportedly looking into how frequent fliers can use miles and how much those miles are devalued over time.
