Stocks opened the day in the red but then went positive as the likelihood of a Fed rate hike diminished. At the close the Dow gained 46 points at 18,538 on heavy volume. Big tech growth names like Face Book and Amazon led the way higher.
US economic data continues to be spotty as evidenced by the latest ISM service sector reading which came in way less than expected and hit a 6 year low. The reading had been humming along at 55.5 but in August it dropped to 51.4 which was below even the most bearish estimates. This news will give Fed “doves” ammunition to argue against a rate hike.
Today was another “Merger Monday” as several M&A deals hit the wires. Canadian energy pipeline giant Enbridge will acquire Huston, TX based Spectra Energy for $28 billion making Enbridge the largest energy infrastructure company in North America if not the world. Volkswagen announced it was purchasing a 19.9% stake in US truck maker Navistar sending Navistar shares significantly higher. Bayer upped its offer to buy US based Monsanto and is now willing to pay $65 billion and last but not least GE whipped out its checkbook and bought two small European 3-D printing companies for about $1.4 billion in an effort to make more “printed” jet engine parts.
ITT Tech, a for profit educational company today announced it was abruptly closings its doors after the Department of Education told them they had to put up a bond of roughly $150 million to cover potential student loan losses. Since ITT only had $78 mill in cash they did the math and decided to go belly up instead of in the hole. 40,000 students are without class, 8,000 employees are looking for work, 130 campuses across the country are idle and the Department of Education may have just caused the very thing it sought to avoid since students who have student debt from a failed school can have that debt canceled if they elect not to transfer their credits to another school. What a sad situation.
Gold today shot higher gaining 2% or $27 per ounce to close at $1,354. The move higher might have had something to do with Eurozone GDP growth being at a low 0.3% rate last quarter.