Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
U.S. stocks jumped today following strong gains overnight in Asian markets, with the Nikkei finishing up 2.5% and the Shanghai Composite gaining 3.4% on strong data from China.
Chinese exports jumped 7.2% in August from a year earlier, easily topping expectations of 5.5%. Separately, the government announced a pilot program to bring private capital to industries including finance, energy, and telecommunications in another step toward liberalizing the economy and driving growth. As the world's No. 2 economy has been a growth engine over the last decade, American markets reacted to the news with the Dow Jones Industrial Average (DJINDICES: ^DJI ) finishing up 141 points, or 0.9%.
Not surprisingly, Caterpillar (NYSE: CAT ) led all blue chips, finishing 2.6% higher as the heavy-equipment maker is dependent on Chinese demand. As miners have scaled back production and Chinese construction has slowed, Caterpillar has taken a huge hit in the last year as shares have dropped a third from their peak. Analysts expect the company's earnings per share to fall 30% this year to just $6.30. The best thing for Caterpillar investors at this point would be for similar news reports to come out of China. Alcoa stock moved up 2% for similar reasons.
There was only one loser today on the Dow, but it was a notable one. Verizon Communications (NYSE: VZ ) fell 0.9% as it begins to raise funding for its landmark $130 billion purchase of Vodafone's 45% stake in Verizon Wireless. The telecom giant is expected to sell more than $20 billion bonds in corporate at an interest spread of 2.25% of treasuries of similar maturities, a figure that would make it the largest debt sale ever. The market still seems to be making up its mind on the deal as Verizon shares initially rose when news sources announced a deal was shaping up but then fell on word of the $130 billion price tag. Also, the company found itself in the middle of a court case against the FCC, which began today. The trial will determine whether the government is able to block Internet service providers from slowing or refusing to show certain content, and may serve as a precedent for a change in the net neutrality policy, which mandates equal access to all consumers and content.
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