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Stock Market News Overshadows Economic Data to Push the Dow Jones Higher Today

By Dan Dzombak - Feb 20, 2014 at 1:30PM

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News of Facebook's acquisition of WhatsApp is pushing U.S. stock markets higher, while economic data is also signaling growth.

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.

Major U.S. stock indices are all rising on the news of Facebook's (META 1.84%) acquisition of WhatsApp and today's economic data. As of 1:30 p.m. EST, the Dow Jones Industrial Average (^DJI 0.93%) was up 110 points to 16,150. The S&P 500 (^GSPC 0.99%) was up 11 points to 1,839.

Facebook is acquiring WhatsApp for $19 billion, or roughly 10% of Facebook's current market cap. The social media giant's stock is up 0.25% to $68.23 on the news. While not in the Dow, Facebook is a large component of the S&P 500. This continues Facebook's strategy of buying potential disruptors at a high price. Facebook's purchase price values each of WhatsApp's 450 million users at roughly $40 per user; that is a bargain compared to Facebook's value of $130 per user, but remains a very high cost nonetheless. The acquisition involves $4 billion in cash, $12 billion in Facebook shares, and $3 billion in restricted stock units for WhatsApp's founders and employees.

There were four U.S. economic releases today.

Report

Period

Result

Previous

Weekly new unemployment claims

2/8-2/15

336,000

339,000

Consumer price index Inflation Rate

January

1.6%

1.5%

Core CPI

January

1.6%

1.7%

Markit flash PMI

February

56.7

53.7

Leading indicators

January

0.3%

0%

The one to pay attention is the Conference Board's Leading Economic Index which jumped 0.3% in January, indicating the economy will continue to expand -- albeit at a slow rate. The index was led higher by the continued large spread between the federal funds rate and the 10-year Treasury bond, indicating easy profits for lenders, and a drop in the four-week average of new unemployment claims to 333,000, from a weekly average of 358,000 in December.

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,620.08 (0.93%) $310.57
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,252.02 (0.99%) $41.78
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$181.62 (1.84%) $3.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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