Factory Orders Weigh on Market

The stock market is backing off the five-year highs it made on Friday. The S&P 500 is currently down 10 points or about 0.7%.

The Commerce Department said that factory orders rose by 1.8% in December which was below the 2.3% Wall Street was expecting. The number for November was revised down to a 0.3% drop.

A fourth-quarter pickup in consumer spending is spurring companies including automakers such as Chrysler Group LLC and Ford Motor Co. (F), reviving a manufacturing industry that cooled in the second half of 2012. The acceleration extended into January, according to a gauge last week that showed factories expanded at the strongest pace in nine months.

“Manufacturing’s fine,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 1.9 percent gain in orders. “The economy continues to improve.”

The bright spot in today’s report is that demand for durable goods rose by 4.3%. That increase was helped by a 12.2% increase in construction equipment and a 6.4% rise for computers.

On our Buy List, Oracle ($ORCL) is buying Acme Packet for $2.1 billion.

The deal is Oracle’s biggest since it bought Sun Microsystems in 2010 for about $7 billion. The company bought nearly a dozen companies in 2012, including Eloqua Inc for $810 million in December.

Telecom carriers have been dumping wireline and other legacy services as people increasingly use a newer breed of devices to access Internet and businesses shift to IP (internet protocol) networks, an area where Acme Packet specializes.

“Users are increasingly connected and expect to communicate anytime and anywhere using their application, device, and network of choice,” Oracle said in a statement.

Oracle Chief Executive Larry Ellison, who has used acquisitions to boost the company’s revenue dramatically over the past decade, had said in October he would not rule out a big deal “down the road”.

Oracle has rallied almost non-stop since the middle of November. From the November 14th low to last Friday’s high, Oracle has gained 23%.

Posted by on February 4th, 2013 at 11:06 am


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