Mid-Morning Market Update: U.S. Markets Drop; Rite Aid To Sell Half Its Stores To Walgreens

Following the market opening Thursday, the Dow traded down 0.11 percent to 21,431.68 while the NASDAQ declined 0.90 percent to 6,178.20. The S&P also fell, dropping 0.32 percent to 2,432.92.

Leading and Lagging Sectors

Financial shares rose by 0.34 percent in the US market on Thursday. Top gainers in the sector included LNB Bancorp Inc LNBB, Regions Financial Corp RF, and Oconee Federal Financial OFED.

In trading on Thursday, technology shares fell by 1.06 percent. Meanwhile, top losers in the sector included VirnetX Holding Corporation VHC, down 9 percent, and Formula Systems (1985) Ltd. (ADR) FORTY, down 7 percent.

Top Headline

Rite Aid Corporation RAD confirmed a finalized asset purchase agreement with rival Walgreens Boots Alliance Inc WBA.

Walgreens has attempted to acquire the entirety of Rite Aid since 2015, but instead Rite Aid will now sell 2,186 of its stores, related distribution assets and inventory for an all-cash purchase price of $5.175 billion. The stores are mostly located in the Northeast, Mid-Atlantic and Southeastern regions of the U.S..

The agreement gives Rite Aid the option to buy generic drugs that are sourced through an affiliate of Walgreens at cost for 10 years. In return, Rite Aid will provide certain transition services for up to three years after the transaction is expected to close within six months.

Equities Trading UP

Acuity Brands, Inc. AYI shares shot up 11 percent to $199.43 after the company posted better-than-expected Q3 results.

Shares of Bassett Furniture Industries Inc. BSET got a boost, shooting up 13 percent to $36.90 as the company reported upbeat Q2 results.

Energous Corp WATT shares were also up, gaining 9 percent to $16.74 after the company disclosed that Dialog Semiconductor is investing an additional $15 million in the company.

Equities Trading DOWN

Rite Aid Corporation RAD shares dropped 25 percent to $2.95. Rite Aid Corporation confirmed a finalized asset purchase agreement with rival Walgreens. Walgreens has attempted to acquire the entirety of Rite Aid since 2015, but instead Rite Aid will now sell 2,186 of its stores, related distribution assets and inventory for an all-cash purchase price of $5.175 billion. Walgreens also posted upbeat quarterly earnings.

Shares of Fred's, Inc. FRED were down 21 percent to $9.69 after RiteAid and Walgreens announced termination of original divestiture agreement. Fred's confirmed in a press release that all asset purchase agreements has been terminated and it will receive $25 million as reimbursement for expenses associated with the termination.

Pier 1 Imports Inc PIR was down, falling around 12 percent to $4.75. Pier 1 Imports reported a narrower-than-expected loss for its first quarter, but revenue missed estimates.

Commodities

In commodity news, oil traded up 1.14 percent to $45.25 while gold traded down 0.68 percent to $1,240.60.

Silver traded down 0.84 percent Thursday to $16.65, while copper rose 0.97 percent to $2.702.

Eurozone

European shares were mostly lower today. The eurozone’s STOXX 600 declined 0.51 percent, the Spanish Ibex Index fell 0.55 percent, while Italy’s FTSE MIB Index dropped 0.52 percent. Meanwhile the German DAX declined 0.65 percent, and the French CAC 40 slipped 1.03 percent while U.K. shares rose 0.12 percent.

Economics

Gross domestic product expanded at an annual pace of 1.4 percent in the first quarter. Economists were expecting a growth of 1.2 percent.

Initial jobless claims increased 2,000 to 244,000 in the latest week. However, economists projected jobless claims to reach 240,000 in the week.

The Energy Information Administration’s weekly report on natural gas stocks in underground storage is schedule for release at 10:30 a.m. ET.

St. Louis Federal Reserve Bank president James Bullard is set to speak in London at 1:00 p.m. ET.

Data on farm prices for May will be released at 3:00 p.m. ET.

Data on money for the recent week will be released at 4:30 p.m. ET.