[Chart courtesy of MarketWatch.com]
U.S. equities bounced off afternoon lows to finish in the positive but were far off session highs in choppy action, as investors received many market moving news. Catalysts included upbeat manufacturing reports out of the U.S., China, and Europe with the increasing likelihood of a US-led military response toward Syria, as House Speaker Boehner said that he supports the President’s plan.
M&A reports also dominated the equity headlines, with Dow member Verizon Communications agreeing to acquire Vodafone Group’s stake in Verizon Wireless for $130 billion, while fellow Dow component Microsoft said it will purchase Nokia’s cellphone business for $7.2 billion. In other deal-making news, CBS Corp and Time Warner Cable reached a programming agreement, while Jarden Corp inked a deal to buy Yankee Candle for about $1.75 billion in cash. Today’s participation marked an improvement over most August sessions as nearly 800 million shares changed hands on the floor of the New York Stock Exchange.
The S&P 500 rose more than 1 percent in early trading after Obama sought congressional authorization before taking military action, a move seen likely to shelve any strike for at least several days. The early gains did not hold past the initial two hours as late-morning comments from House Speaker John Boehner and Majority Leader Eric Cantor.
Crude oil climbed off its overnight lows as the remarks from the two Congressional leaders provided an additional boost. The energy component rose 0.8% to $108.55 per barrel while the energy sector added 0.6%. Outside of the two commodity-linked sectors, financials (+0.8%) and discretionary (+0.8%) shares settled in the lead.
Meanwhile, Verizon lost 2.9% after announcing plans to purchase Vodafone’s 45% stake in Verizon Wireless for $130 billion in cash and stock. The underperformance of Verizon weighed on the telecom services space (-1.8%) which settled behind the remaining nine sectors. Meanwhile, manufacturing activity expands to join other global reports.
The ISM Manufacturing Index edged up 0.3 points in August to 55.7, the highest level since June 2011, and contrary to the consensus of a 1.6-point decline to 53.8. The report was generally positive, denoting expansion in manufacturing for the third consecutive month, although components within the index were mixed.
Eurozone also saw an upward revision to its Manufacturing PMI Index, led by stronger-than-initially reported activity in Spain, England and Italy. Also, upbeat PMI manufacturing reports released by China over the weekend added to the party.
Despite some of the encouranging economic news, today’s action proved that volatility is here to stay for the time being. In the end, our Trend Tracking Indexes (TTIs) changed only slightly from Friday’s close with the Domestic TTI closing at +0.98% and the International TTI settling at +3.50%.