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Dow Drops More Than 700 Points & Is Heading For Its Worst Decline Of The Year

Dow Drops More Than 700 Points & Is Heading For Its Worst Decline Of The Year

Plus, DISH Network said it has signed a multi-year agreement with AT&T worth $5 billion for wireless services, Zoom is buying cloud contact center software provider Five9 for $14.7 billion, and Bill Ackman’s Pershing Square Tontine Holdings SPAC has dropped its deal for 10% of Universal Music Group.

Stocks were lower at the open on Monday with the Dow dropping 159 points, or 0.45%. The S&P 500 slid by 0.7%, while the Nasdaq fell 1.3%.

The Dow was down by more than 700 points, or more than 2%, shortly after the open marking its biggest decline for the year. The S&P 500 and Nasdaq also both dropped by more than 1%. “You have two concerns coming together this morning: concerns about market technicals and concerns about growth,” said Mohamed El-Erian, chief economic adviser of Allianz and former CEO of PIMCO. “That’s what all the asset classes are telling you this morning.” COVID-19 cases have rebounded across the U.S., with the average daily case count now exceeding 30,000, up from an average of 11,000 new cases per day a month ago. With case counts climbing, airline stocks are heading lower with Delta dropping more than 4%, and American Airlines and United Airlines both falling more than 5%. Stocks linked to the global economy also slid, with Boeing dropping 5%, and Ford and Caterpillar dropping more than 3%.

West Texas Intermediate futures fell to $66.99 Monday morning, its lowest level in a month, after OPEC+ agreed to raise output by 400,000 barrels per month beginning in August, with the hike expected to continue through September 2022. The news comes after OPEC+ talks failed earlier this month amid a disagreement between Saudi Arabia and the United Arab Emirates. “This was a renewal of OPEC+ vows. We think the market can absolutely absorb the additional 400,000 barrels per month… this is a constructive agreement,” said RBC’s Helima Croft, head of global commodity strategy. “This agreement should give market participants comfort that the group is not headed for a messy breakup and will not be opening up the production floodgates anytime soon.”

DISH Network said today that it has signed a multi-year agreement with AT&T making it the primary network services partner for DISH’s wireless customers. Under the deal, which is worth at least $5 billion, AT&T will provide voice, data, and messaging services to customers of DISH’s mobile virtual network operators, Boost Mobile, Ting, and Republic Wireless. DISH’s wireless customers will also have access to voice and data roaming services through AT&T’s network as part of the deal. “Teaming with AT&T on this long-term partnership will allow us to better compete in the retail wireless market and quickly respond to changes in our customers’ evolving connectivity needs as we build our own first-of-its kind 5G network,” John Swieringa, DISH COO and Group President of Retail Wireless, said in a press release. “The agreement provides enhanced coverage and service for our Boost, Ting and Republic customers, giving them access to the best connectivity on the market today via voice, messaging, data and nationwide roaming on AT&T’s vast network, as well as DISH’s 5G network.” DISH has 8.89 million wireless subscribers as of its last earnings report.

Zoom Video Communications announced this morning that it is buying cloud contact center provider Five9 in an all-stock deal valued at roughly $14.7 billion. The deal marks Zoom’s first billion-dollar acquisition, and is the second-biggest tech deal this year after Microsoft’s planned purchase of Nuance Communications for $16 billion. “We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” Zoom CEO and founder Eric Yuan said in a press release. “Zoom is built on a core belief that robust and reliable communications technology enables interactions that build greater empathy and trust, and we believe that holds particularly true for customer engagement. Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers. We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”

And Bill Ackman’s Pershing Square Tontine Holdings SPAC said today that it has dropped its deal to buy 10% of Vivendi’s Universal Music Group. The $4 billion deal was announced back in June, but the SPAC said that its board had unanimously decided not to proceed with the purchase following discussions with the SEC. “Our decision to seek an alternative initial business combination (“IBC”) was driven by issues raised by the SEC with several elements of the proposed transaction – in particular, whether the structure of our IBC qualified under the NYSE rules,” Ackman said in a letter to shareholders. “While we are disappointed with this outcome, we continue to believe that the unique scale and favorable structure of PSTH will enable us to find a transaction that meets our standards for business quality, durable growth, and a fair price.”

Stocks We’re Watching

Southern Company (NYSE: SOLN): Southern Company announced today that its Nicor Gas subsidiary’s Renewable Interconnection Pilot received approval July 8 from the Illinois Commerce Commission. “Nicor Gas is committed to helping our communities thrive and to bettering our environment. This program seeks to do that by bringing sustainable, clean RNG to the marketplace, while creating clean energy jobs and new revenue streams for Illinois businesses,” said John O. Hudson III, president and CEO of Nicor Gas. “We look forward to working with RNG producers and consumers during the pilot program while helping our state lead in the progress toward a clean energy future.”

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