Stocks Lower After Disappointing Services Data

Morningstar

U.S. Market
Stocks fell this morning after worse-than-expected data.

The ISM services index came in at 53% in December, down from 53.9% in November. Economists had expected a reading of 55%. Any number over 50% indicates an expansion in the U.S. services sector. The new-orders component fell to 49.4%, the first time it has been below 50% since July 2009.

Factory orders rose 1.8% in November according to the U.S. Commerce Department. Analysts had predicted a more modest 1.6% rise. Durable goods orders were 3.4% higher in the month, while nondurable orders were up 0.8%.

At midday the Dow, S&P 500 and Nasdaq were down 0.2%, 0.3% and 0.5% respectively.

Stocks on the Move
T-Mobile US (TMUS) announced that it will acquire 700 MHz A-block spectrum licenses from Verizon Wireless (VZ) in exchange for $2.365 billion in cash and a handful of AWS and PCS spectrum licenses. While T-Mobile will gain important low-band spectrum, the purchase price looks expensive at first glance. T-Mobile has assigned a value of $950 million to the licenses it will give to Verizon, bringing the total cost to $3.3 billion or $1.85 per MHz POP (the amount of spectrum in megahertz multiplied by the number of people each license covers). Given that the 700 MHz A-block licenses T-Mobile will gain primarily cover major metropolitan areas, this value doesn't look egregious on the surface. T-Mobile has already funded the cash portion of this transaction via the issuance of debt and equity last November. Shares of T-Mobile were up 2.5% at midday.

General Electric (GE) said today it is buying several life-science businesses from Thermo Fisher Scientific (TMO) for $1.06 billion. Thermo is selling the businesses to satisfy European regulators ahead of its planned acquisition of Life Technologies (LIFE) . Thermo shares were up slightly on the news, while GE shares were off less than 1%.

Men’s Wearhouse (MW) raised its hostile takeover bid for rival Jos. A. Bank Clothiers (JOSB) to $57.50 per share from $55 per share today. Jos. A. Bank adopted a poison pill last week in an effort to raise a roadblock to any offers. Jos. A. Bank shares were up over 4% at midday while Men’s Wearhouse saw its shares rise 3%.

Foreign Markets
European markets were mostly lower on the day. In late trading, the FTSE 100 was flat while the Paris CAC and Germany’s DAX were down 0.5% and 0.1% respectively.

Asian shares started the week off on a low note. The Nikkei 225 was down 2.3%, the Shanghai Composite was off 1.8% while the Hang Seng lost 0.6%.

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