A series of positive mergers and acquisitions (M&A) news, as well as some encouraging economic data, is giving all the major equity indices an impressive lift during today’s session. The NASDAQ managed to hit yet another 15-year intraday high, and officially crossed above the 5000-level. Remember, of course, that the all-time high for the NASDAQ was set back on March 10, 2000 at a price of 5048.62. With the way things are going, if no market pullback occurs, the NASDAQ should reach a new all-time high almost 15 years to the day it was first set.

There was a whole slew of economic data released this morning, some of it mixed, but with a few very positive data points in our view. Firstly, personal income and spending were moderately healthy in January even after price effects were discounted. Personal income increased by 0.3% in January after growing 0.3% in December as well, however this was shy of consensus’ estimate for a 0.4% increase. The wages and salaries component notably jumped during the month by 0.6% after a rise of 0.1% in December. On the other hand, personal spending actually slowed, declining by 0.2% for the month after a 0.3% decline in December. Durable goods spending declined by 0.1% in the month after a 1.4% decline in the prior month due to sluggish auto sales, while nondurables-spending dropped 2.2% in January after declining by 1.4% the month before, mostly due to lower gas prices. Additionally, weakness in current dollar spending was price related as price adjusted personal spending came in at 0.3%, following a 0.1% dip in December. This is actually a good start for first quarter gross domestic product (GDP) in the PCE component. Personal savings as a percentage of income also increased for the month, rising by 5.5% in January from 5.0% in December. All in all, income growth was relatively positive in January; the consumer sector has fuel for spending, which is overall encouraging for retail sales. However, inflation is low and well below the Federal Reserve's target of 2.0% year-over-year inflation, meaning the Fed likely will stick with no interest rate hikes prior to June.

Perhaps not surprising given the recent weakness in manufacturing reports, but construction spending outlays declined by a relatively large 1.1% in January after gaining by 0.4% in December. This number falls well below consensus expectations which were for a 0.3% boost. The decline for the month was primarily led by public outlays which dropped 2.6% after rebounding by 1.7% in December. Private nonresidential construction spending declined 1.6% in January, after a 0.1% rise in December, while private residential spending rose 0.6% after increasing 0.7% the month before. However, on a year-over-year basis, total outlays were up 1.8% in January which was a bit slower than the 2.2% year-over-year increase in December. Overall, this report shows a softening in the overall construction sector, but there are notable gains in the housing component. We note that increased activity in this subcomponent suggests a fair amount of optimism among homebuilders and perhaps also a shortage in the supply of new homes available on the market. There’s a definitive gain in the residential investment component but a decline in the nonresidential component, both of which are factored into GDP calculations.

Lastly, as to be expected when taking into account the various Fed manufacturing reports, growth is visibly slowing in the Institute for Supply Management’s (ISM) sample on the manufacturing purchasing managers index (PMI) for February. The PMI index slowed to a composite reading of 52.9, which is well below the January reading of 53.5. February’s reading denotes the slowest rate of growth since January 2014 when the polar vortex put a damper on manufacturing-related activities. For the month, new orders slowed 4 tenths to 52.5 which is the slowest rate of growth since May 2013 while production slowed 2.8 points to 53.7 which is the slowest rate of growth since February 2014. Also weak was employment, which slowed 2.7 points to 51.4 for its slowest growth rate since June 2013. Additionally, delivery times increased, which contributed positively to the index, but it is not considered a sign of strength in demand, but rather due to labor-related delays at West Coast ports and heavy snowfall on the East Coast. Input prices are down for a 4^th straight month, reflecting lower oil prices. We note that the manufacturing sector has been uneven the last few months in large part due to weak foreign demand. A worrisome metric is the slowdown in employment, which could be negative for Friday’s jobs report.