AT&T and Verizon Climb as General Motors' Recall Hurts Stock
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Retail sales figures for January were released this morning and the report wasn't really what investors wanted to see. Sales dropped to a seasonally adjusted 0.4% from December to January, which is the largest drop in more than a year and a half. Additionally, sales numbers were revised lower for December, erasing a reported increase. You can blame the colder than normal weather and weak car sales for the decline. After really driving the overall sales number the previous two months, auto sales dropped in December and January -- so much that when we take autos out of the picture, sales were up 0.3% in December and flat in January.
While this economic data was enough to push the major indices lower at the start of today's trading session, as of 1 p.m. EST the Dow Jones Industrial Average's was up 24 points, or 0.15%, the S&P 500 was higher by 0.22%, and the Nasdaq rose 0.41%.
Within the Dow, Cisco shares have made the largest change today, down nearly 4% after the company reported earnings last night. Other big movers are the Dow's telecommunications companies: AT&T was up 0.8% and Verizon rose 0.4%. The move comes after Verizon announced that it would follow its rivals' lead and revamp data plans in order to remain competitive. T-Mobile arguably took the first shot at offering cheap rates as a way to draw customers from the competition; AT&T followed suit when it announced a cheaper version to its family plan; now comes Verizon. While these changes are certainly good for the consumer, they are also likely to show up in earnings as lower margins roll in.
Outside the Dow, shares of Ford are flat today in the face of the weak retail sales figures; that is likely due to the fact that Ford had already released its own sales numbers. But General Motors shares are off by more than 1.6% after the company announced that it was recalling nearly 780,000 compact vehicles in North America. The recall affects Chevrolet Cobalt and Pontiac G5 lines from 2005 through 2007. The problem is that the engine can shut down unexpectedly if the ignition switch is moved due to something like the weight of the key ring or rough roads. If that happens the airbags may also not work if an accident occurs. This issue has reportedly caused 22 accidents in which six people have died. Until owners can have their car serviced, GM says drivers should take all nonessential items off their key rings.
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The article AT&T and Verizon Climb as General Motors' Recall Hurts Stock originally appeared on Fool.com.Matt Thalman owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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