The Institute for Supply Management Services Index (ISM), which measure activity outside the factor sector showed expansion for an 11th straight month at 54.7. While today's report was slightly below consensus for a 55.5 reading, levels above 50 indicate business expansion at the services level.
Last week, the ISM factory index rose to 54.7 in December from 49.2 in November, marking the first time in four months that the more industrial sectors showed expansion.
Today's ISM services data along with last week's industrial data show the consumer continues to be the key driver in a modest economic recovery scenario and has stocks holding their best levels of the session.
The Dow Industrials (INDU) 8,699 +1.13% built a recent session high of 8,716 with SBC Communications (NYSE:SBC) $31.20 +8% leading the Dow gainers list after the Wall Street Journal reported that the Federal Communications Commission was planning to stop making local phone companies rent their networks at cheap rates, which could reduce competition and price-cutting pressures.
Fellow Dow component AT&T (NYSE:T) $27.37 -1% lags telecom bullishness after the long distance carrier announced it will be taking a $1.54 billion charge over the next several quarters.
On a more near-term basis, the company said it will take a $240 million charge in the fourth quarter from a combination of asset- impairment charges related to the extension of its DSL agreement with Covad ($200 million), and roughly $40 million in charges primarily associated with approximately 3,500 planned employee layoffs.
The combined effect of the special expenses in the fourth quarter will reduce Q4 earnings per share by $1.75.
Telecom sector action has the North American Telecom Index (XTC.X) 497.55 +4.61% holding this morning's sector winner, while the Fiber Optic Index (FOB.X) 51.22 +4.44% is a close second in percentage gainer terms, as many companies in this sector are tied directly to the telecom stocks themselves.
Sector weakness is limited with the Oil Service Index (OSX.X) 87.37 -1.52% and Dow Jones Home Construction Index (DJUSHB) 310 -1.25% lagging this morning's more bullish broader-market tone.