3 Reasons Markets Were Up After U.S. Justice Department Whips AT&T’s Acquisition of T-Mobile
Markets closed up on Wall Street today: Dow +0.47%, S&P +0.49%, Nasdaq +0.13%, Oil +0.01%, Gold -0.13%.
On the commodities front, Oil (NYSE:USO) was mostly flat, finishing the day at $88.91 a barrel. Precious metals were also were, with Gold (NYSE:GLD) falling to $1,827.40 an ounce while Silver (NYSE:SLV) climbed 0.32% to $41.60 an ounce.
Today’s markets were up because:
1) Germany. German Chancellor Angela Merkel’s Cabinet ratified measures today to combat the euro-area debt crisis, with senior members of Merkel’s Christian Democrats saying they are now confident they will be able to secure a coalition majority for the proposed changes to the European rescue fund. Just two days ago, Merkel didn’t have enough coalition votes in the Bundestag to ensure the measure would be passed. Without the plan to expand the authority of the European Financial Stability Facility and increase Germany’s (NYSE:EWG) financial contribution to the fund, the German government would be risking the collapse of individual countries, the region’s common currency, and ultimately the European economy as a whole.
2) Justice Department. As the U.S. Department of Justice filed suit to block AT&T’s (NYSE:T) $39 billion acquisition of T-Mobile, direct competitor Sprint (NYSE:S) got a boost while Dish Network (NASDAQ:DISH) was also trading up, maybe because AT&T has a partnership with its biggest competition, DirecTV (NASDAQ:DTV), though the fact that Dish announced plans to build a 4G network might have been a contributing factor. Meanwhile, AT&T shares plummeted, as did shares of Deutsche Telekom, of which T-Mobile remains a subsidiary. Oddly Verizon (NYSE:VZ) was also trading down, falling nearly 0.5% today. While telecommunications and technology stocks were the worst performers today after the news, the sector still posted slight gains for the day, with the 3 major indices all closing up, though the tech-heavy Nasdaq held out until the last few minutes of trading.
3) Financials. After taking a dip Tuesday on news that the FDIC opposed its $8.5 billion mortgage-bond settlement with investors, Bank of America (NYSE:BAC) shares rallied today, climbing 1.48% and leading the financial sector to outperform the markets and finish the last day of August as the strongest sector. All of the nation’s major banks were up, including JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Barclays (NYSE:BCS), which climbed over 3%.