Two News Stories About AT&T May Have Hurt the 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.

After talks fell apart over the weekend, this morning it seemed the politicians in Washington were never going to come together and agree on a solution to end the government shutdown and avoid hitting the debt ceiling on Thursday. But when the 3 p.m. EDT meeting between parties at the White House was postponed, giving lawmakers more time to negotiate, investors seemed to gain confidence that a deal was imminent. That enthusiasm helped push the Dow Jones Industrial Average higher by 64 points, or 0.42%, today after being down as much as 101 points this morning and closed at 15,301. The S&P 500 inched higher by 0.41% while the Nasdaq jumped 0.62%.

But before you run out and go on a buying frenzy with the idea that a compromise in Washington will send stocks higher, only members of the Senate, not the Republican-controlled House of Representatives, believe in that deal. So it would be best to wait and see what happens and let the market cool down before trying to time a quick move higher.

The Dow wasn't the only one getting a lot of attention from Wall Street and the news outlets today. AT&T  gained a good deal of attention as a number of news headlines broke relating to the company. First, it was announced that the Al Jazeera must unseal its lawsuit against AT&T within five business days unless the parties appeal the ruling to the Delaware Supreme Court. Both AT&T and Al Jazeera's had sought to keep the information sealed, but pressure from news organizations objecting to the information remaining secret forced the judge overseeing the case to take a look at the reason the disputing parties wanted it sealed. And after reviewing AT&T's and Al Jazeera's reasons, Judge Sam Glasslock decided neither gave "good cause" for the aspects of the lawsuit to remain private.  

In other news related to AT&T, the company announced today that new customers will soon only be able to purchase Mobile Share Plans. The move comes as it attempts to fight customer turnover as smaller competitors challenge its dominance in the U.S. telecom industry. Sprint and T-Mobile have stepped up their efforts in the past few months to attract new customers from AT&T and Verizon. The new strategy of only offering share plans is to tie mobile customers into the AT&T system with a number of devices to make their network "stickier" and have a lower rate of customer turnover.

With both these news stories hitting investors' hands today, shares of AT&T fell 0.82%. There is clearly a reason the company doesn't want the details of Al Jazeera's lawsuit to become public and now that it may, investors might have cause to worry that the documents will hurt its business. And as for the Mobile Share Plan idea, well, while this may be a good one to keep customers, it also may turn a lot of potential new customers off and make them not want to join the AT&T family.

From my perspective, the Al Jazeera thing is good because if the lawsuit has hidden information that will hurt the company, I want to know about it now, not in six months or a year. And as for the Mobile Share Plan strategy, we will just have to wait and see how the numbers look a few quarters from now. If we see fewer customers going to AT&T, that will surely be a red flag, even if defection rates fall.

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Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513The Motley Fool has no position in any of the stocks mentioned, either. 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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