Markets are humming today, and the Dow Jones Industrial Average (INDEXDJX:^DJI) is flexing its muscles after some good news from the economic front. The Institute for Supply Management released its report this morning, showing that manufacturing activity expanded again in August, for the third month in a row, increasing to 55.7 over July’s reading of 55.4. The Census Bureau also released data showing that residential construction spending increased in July by 0.5%, good news for the housing industryBig deals, big winners — and losers
By midmorning, the Dow Jones Industrial Average (INDEXDJX:^DJI) already had some big winners, as JPMorgan Chase & Co (NYSE:JPM) and Bank of America Corp (NYSE:BAC) lifted the banking sector with the news that the two financial giants landed a huge financing deal. Both banks will be participating in the $61 billion bridge loan that will finance the Verizon Communications Inc. (NYSE:VZ) $130 billion acquisition of its 45% stake in Vodafone.
For the banks, the deal is win-win, since their participation in the huge 364-day bridge loan will net them some juicy underwriting fees. For Verizon Communications Inc. (NYSE:VZ), however, things are looking a bit grim. The stock has dipped more than 3.5% already today, some of which can be attributed to its announced $0.53 per share dividend yesterday. Still, the fact that it is still dropping might signal investor dismay with the purchase, along with concerns regarding Moody’s downgrading of the company’s debt based on the takeover news.
In other tech news, Microsoft Corporation (NASDAQ:MSFT) continues its downward spiral, losing more than 6% so far today. The announcement that it intends to buy Nokia‘s cellphone business for $7 billion isn’t sitting well with analysts or investors — particularly since part and parcel of the deal is the addition of Nokia’s CEO Stephen Elop, formerly of Microsoft Corporation (NASDAQ:MSFT). Though Elop is resigning from Nokia’s board to smooth the transition, he is regarded as a possible replacement for Steve Ballmer, who announced his retirement last month. Considering that Nokia’s cellphone unit is facing decreased demand — and that the company recently suffered a further downgrade from Moody’s into junk status, due to its buyout of its Nokia Siemens partner — investors have a right to be fretful.
As the day moves on, there may be some dips in the Dow Jones Industrial Average (INDEXDJX:^DJI), as investors begin to worry that the brighter economic news from the ISM and construction might push the Federal Reserve closer to tapering its current quantitative easing program.
The article Dow Perks Up Following an Eventful Weekend originally appeared on Fool.com and is written by Amanda Alix.
Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Vodafone. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Microsoft.
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