What Happened in the Stock Market Today

By Demitrios Kalogeropoulos Markets Fool.com

Image source: Getty Images.

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Stocks declined on Wednesday as investors reacted to the second interest rate hike by the Federal Reserve since 2008. The Dow Jones Industrial Average(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) indexes both fell by over 0.5% to step back from all-time highs.

Today's stock market:

Index

Percentage Change

Point Change

Dow

(0.60%)

(118.68)

S&P 500

(0.81%)

(18.44)

Data source: Yahoo! Finance.

Gold prices slumped to a 10-month low after the Federal Reserve announced a 0.25% interest rate hike and raised its expectations for rate increase over the next few years. The decline pushed the leveraged Direxion Daily Gold Miners Bull 3X ETF (NYSEMKT: NUGT)down 13%. The Financial Select Sectors ETF (NYSEMKT: XLF) also saw heavy trading, but it ticked just slightly lower to remain solidly higher over the past month.

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Individual stocks on the move included Neustar (NYSE: NSR) and Aegean Marine Petroleum Network (NYSE: ANW).

Neustar goes private

Information services specialist Neustar jumped 21% following news that it's being taken private in a deal valued at $2.9 billion. The rally put the stock up 35% over the last 12 months, yet locked in a disappointing result for long-term shareholders. After all, Neustar shares are essentially unchanged over the last five years.

Management is betting that a buyout represents the best path forward right now, given the added flexibility inherent with going private. "We believe this transaction will enable us to continue to execute against our strategy and strengthen our market position as a leader in marketing, risk, security and communication solutions," CEO Lisa Hook said in a press release. The agreement "will deliver certain and immediate value to our shareholders," added Chairman James Cullen.

Neustar's new owner will be Golden Gate Capital, which announced in mid-November that it had taken a significant stake in the company. Golden Gate is paying $33.50 per share in cash for Neustar's stock, representing a 45% premium to its closing price on the day before it revealed its equity stake. Even though the transaction is subject to shareholder and regulatory approval, investors are treating it as highly likely and have bid shares up to just below the proposed closing price.

Aegean Marine Petroleum Network raises debt

Ship refueling specialist Aegean Marine Petroleum Network sank 14% after the company took on a significant chunk of new debt. Rather than borrow $100 million, as it originally intended, Aegean took advantage of healthy demand to raise the total to $150 million. Debt purchasers also have the option to further hike their commitment by another $22.5 million, executives said.

The new debt is slightly more expensive than Aegean's current liabilities as it carries a 4.25% annual interest rate, compared to the 4% notes the company will be retiring with the funds from this latest round of borrowing. Yet the stock's decline might have more to do with the fine print that's involved in this deal. The debt is convertible to Aegean common stock at the price of $14.95 per share at maturity in 2021. Aegean can choose to pay the notes back with cash, but it could also rely completely on stock issuances.

That option would help protect its cash position, but it would also dilute existing shareholders by increasing the outstanding share count. While it's good news that Aegean now has more flexibility to weather the headwinds currently hurting the shipping industry, its interest payments are set to take out a bigger chunk of earnings, and investors may also see their stake of those profits watered down over time.

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Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.