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.
Two massive corporate deals have the Dow Jones Industrial Average (^DJI 0.36%) near breakeven for the day despite positive economic news. As of 1:30 p.m. EDT the Dow is down 0.11% to 14,795, while the S&P 500 (^GSPC 0.41%) is up a modest 0.22%.
There were three U.S. economic releases today.
|
Report |
Period |
Result |
Previous |
|---|---|---|---|
|
Markit PMI |
August |
53.1 |
53.7 |
|
ISM PMI |
August |
55.7% |
55.4% |
|
Construction spending |
July |
0.6% |
0% |
The purchasing managers' indexes from both the Institute for Supply Management and Markit showed that economic activity expanded in August from July. Markit's PMI showed activity expanding at a slower rate than in July. ISM's reading showed activity expanding at a slightly faster rate than in July, with the new-orders index up nearly 5 percentage points. The only potentially worrisome sign was a large jump in respondents paying higher prices.
Source: Institute for Supply Management.
Today's other economic release was construction spending for the month of July. The Department of Commerce reported that construction spending rose 0.6% in July to a seasonally adjusted annual rate of $900 billion. That's 5% above last year and higher than June's report of flat construction spending. Analysts had expected only a 0.3% rise.
US Construction Spending data by YCharts.
Labor Day deals
The big news over the holiday weekend was that Microsoft (MSFT 3.90%) announced that it will acquire Nokia's (NOK +4.77%) mobile business for $7.2 billion. Microsoft's stock is down nearly 6% on the news, while Nokia's stock is up 30%. Microsoft said it "aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing." Nokia's Steven Elop made a big bet on Microsoft's mobile operating system years ago. Now, as one of the main carriers of the operating system, Nokia will give Microsoft a stronger competitive foothold to compete against Apple's iOS and Google's Android operating system.
Second, Verizon's (VZ +2.70%) deal for Vodafone's (VOD +2.02%) 45% stake in Verizon Wireless was finally officially announced. Verizon will pay Vodafone $130 billion -- roughly $59 billion in cash and the remainder in stock -- for Vodafone's 45% stake in Verizon Wireless. For Verizon shareholders, the company seems to be making a big bet at a time when margins are at five-year highs and everything is going well. Vodafone shareholders can look forward to a large special dividend and buybacks, with the company committing to return 70% of the deal's value to shareholders.
