Stocks were lower today as traders began making adjustments to reflect the increasing prospects of the Federal Reserve raising interest rates before the end of the year. The Dow closed off 170 points today to 17,730. Trading volume however was much lower than Friday’s session indicating that institutional investors were not sellers.
The big news on Monday was the announcement that Weyerhaeuser and Plum Creek Timber had signed a merger agreement in which Weyerhaeuser would buy Plum Creek for roughly $8.4 billion in an all stock deal. The combined company, if approved by regulators, would hold 13 million acres of timberland in the US. The buyout confirms the intentions of Weyerhaeuser to shed mills and focus on land and trees. It also puts other smaller timber companies in the crosshairs as potential targets including Rayonier and Spokane based Potlatch. Weyerhaeuser CEO Doyle “Big Timber” Simons will run the show while Plum Creek’s CEO Rick “Stumpy” Holly will be a “non-executive?” Chairman whatever that means. Maybe Rick might, in the words of western writer Louis L ’amour, “drift south, punch a few cows or maybe work for the railroad”.
Consumer stocks pulled back today as online travel company Priceline reported earnings. While the company’s net income was above estimates the forward guidance was low causing a selloff in shares.
Oil today fell after Saudi Arabia reaffirmed its intentions to continue current production rates in order to keep market share. A collective groan went up from the ranks of OPEC and sent prices lower. Russia and Venezuela continue to produce at near record levels as they attempt to maintain cash flows in the face of low prices. These issues signal that oil could likely remain cheap for some time. In the US, stockpiles continue to remain elevated. WTI crude oil today closed at $44 per barrel.