Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.
Stocks are moving slowly lower today as yesterday’s sell-off continues. The Thomson Reuters/University of Michigan reading of consumer sentiment fell to 80 this month from 85.1 in July, and the outlook fell to 72.9. Sentiment can bounce a lot from month to month, but in general investors like to see it moving higher, because it indicates that consumer spending, which accounts for 70% of the economy, will improve in the future.
On the plus side, productivity rose 0.9% year over year in the second quarter after falling 1.7% in the previous two quarters. That indicates that companies are getting more out of each worker, which helps drive profit growth in the long term. But that positive indicator wasn’t enough to spark buyers today, and the Dow Jones Industrial Average is off 0.12% late in trading, while the S&P 500 is down 0.26%.
Verizon Communications Inc. (NYSE:VZ) is the biggest drag on the Dow today, falling 1.8%. T MOBILE US INC (NYSE:TMUS) raised $500 million in its first bond sale since its merger with MetroPCS despite the fact that the company’s majority owner, Deutsche Telekom, is trying to sell $11.2 billion in debt it holds. What Verizon Communications Inc. (NYSE:VZ) investors are seeing is a relatively low interest rate for T MOBILE US INC (NYSE:TMUS) debt, which means investors are willing to fund the one company gaining steam against Verizon Wireless and AT&T. I don’t think Verizon Wireless’ long-term position is in any grave danger, but T MOBILE US INC (NYSE:TMUS) did gain 1.1 million customers last quarter, and Verizon Communications Inc. (NYSE:VZ) may have to reconsider its contracts or pricing if T MOBILE US INC (NYSE:TMUS)gains more momentum.
On the positive side, Bank of America Corp (NYSE:BAC) is up 0.8% today. The company said it plans to fold its Merrill Lynch subsidiary into Bank of America Corp (NYSE:BAC) in an effort to cut costs and make reporting more streamlined. Bank of America Corp (NYSE:BAC) would then take over Merrill Lynch’s obligations and debt, but the company would begin showing a single face to customers. This isn’t a surprising move and probably doesn’t change the investment thesis, even if the company does see some cost savings.
The article Stocks Continue to Slide as Consumer Sentiment Falls originally appeared on Fool.com and is written by Travis Hoium.
Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America.
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