Why the Dow Closed at a Record High and MSG Shares Jumped

The blue chips edged into record territory, and MSG jumped on news of the Clippers sale.

May 30, 2014 at 10:00PM

Stocks traded underwater for most of today's session, but a late-day rally took both the S&P 500 and Dow Jones Industrial Average (DJINDICES:^DJI) to record closing highs. The S&P finished up 0.2% to close at 1,923.57, while the blue chips added another 0.1%, or 18 points, to close at 16,717. Today was also the last trading day in May, and stocks racked up their fourth-straight monthly gain. Severe winter weather momentarily threw the economy off track, but failed to deter investors. And recent economic reports have come in much stronger, indicating the economy is growing robustly this spring. Bond rates also remain low, encouraging investors into stocks, but concerns linger about the market's valuation after last year's big gains.

Today, the Chicago PMI showed a strong expansion in manufacturing activity as the index increased from 63.0 to 65.5, better than estimates at 60.3, and indicating a robust expansion in that sector. Order backlogs also rose to a three-year high in May, indicating that activity should remain strong. Gains in the labor market and an improving consumer outlook seem to be finally trickling down to the industrial sector, as the durable-goods report earlier this week also showed surprising growth.

Elsewhere, consumer confidence fell slightly in May according to the University of Michigan's report, whose index came in at 81.9, below April's total at 84.1, but still ahead of estimates at 81.4. Consumers' primary concern was wage growth, though a majority of consumers said the economy had improved. Consumer spending also dropped by 0.1% in April, but that followed 1% growth in March, indicating the slide is likely to be temporary. 

Source: Official logo

Among stocks gaining today was Madison Square Garden (NASDAQ:MSG), which moved up 3.3% after the New York Rangers advanced to the Stanley Cup Finals, and Steve Ballmer, the former Microsoft CEO, reportedly agreed to buy the Los Angeles Clippers for $2 billion. MSG owns the Rangers and the New York Knicks, as well as several media outlets engaged in broadcasting sports and other entertainment. While the Rangers' ascension to the Stanley Cup Finals is good news for the company, providing a national spotlight to the NHL team and another series' worth of media and ticket revenues, it's the Clippers' deal that's the juicy part of the story here. Ballmer's $2 billion offer would be one of the biggest in sports history, and makes MSG, at a market cap just north of $4 billion, look like a bargain if the arguably more prestigious Knicks were valued similarly. Ballmer seems to be the winner in a hot bidding contest, which has underscored the skyrocketing value of professional sports teams, as there are a limited number of them. The current owner, Donald Sterling, who was forced to sell the team after racist comments he made went public, purchased it for just $12 million in 1981. If those price tags continue to increase, MSG could be a steal at today's price.  

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Madison Square Garden. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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