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 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 is up a modest 0.22%.
There were three U.S. economic releases today.
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.
Labor Day deals
The big news over the holiday weekend was that Microsoft Corporation (NASDAQ:MSFT) announced that it will acquire Nokia Corporation (ADR) (NYSE:NOK)‘s mobile business for $7.2 billion. Microsoft Corporation (NASDAQ:MSFT)’s stock is down nearly 6% on the news, while Nokia Corporation (ADR) (NYSE:NOK)’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 Corporation (ADR) (NYSE:NOK)’s Steven Elop made a big bet on Microsoft Corporation (NASDAQ:MSFT)’s mobile operating system years ago. Now, as one of the main carriers of the operating system, Nokia will give Microsoft Corporation (NASDAQ:MSFT) a stronger competitive foothold to compete against Apple’s iOS and Google’s Android operating system.
Second, Verizon Communications Inc. (NYSE:VZ)‘s deal for Vodafone Group Plc (ADR) (NASDAQ:VOD)‘s 45% stake in Verizon Wireless was finally officially announced. Verizon Communications Inc. (NYSE:VZ) 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 Communications Inc. (NYSE:VZ) 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 Group Plc (ADR) (NASDAQ:VOD) 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.
The article Big Deals Hold Back the Dow originally appeared on Fool.com and is written by Dan Dzombak.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.