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Business, Finance, Occupation & Industry

Why the Dow Is Struggling to Hold On Today

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By John Maxfield, The Motley Fool

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Earlier today, it looked as if yesterday’s losses were behind us, as the Dow Jones Industrial Average had rallied more than 70 points in morning trading. However, it dipped into negative territory and then clawed its way back for a modest gain of 37 points, or 0.26%, by 3:15 p.m. EDT.

The obvious indecision in the market today stems from two countervailing factors. On the one hand, the Department of Labor reported today that significantly more Americans filed for unemployment last week than had been anticipated by economists. For the final week of March, 385,000 people submitted applications for unemployment benefits. That was 28,000 more than had filed in the prior week, and it greatly exceeded the expected figure of 350,000. According to an economist quoted by The Wall Street Journal, “Whether this is a genuine change in the trend or not, today’s data will undoubtedly only compound fears that growth is slowing significantly again.”

Alternatively, news that the Bank of Japan is initiating an aggressive policy of monetary easing spurred on the market‘s bulls. As I discussed earlier today, the Asian country’s central bank is making good on its promise to achieve a 2% rate of inflation after two decades of persistent deflation. To reach its goal, it has committed to doubling its monetary base “with a time horizon of about two years.” The news sunk the Japanese yen and sent the country’s primary stock index higher.

The best-performing stock on the Dow this afternoon is AT&T . As my colleague Dan Dzombak discussed earlier, rumors surfaced yesterday that the company may team up with its rival Verizon to buy Vodafone. Those rumors were subsequently denied. Today, however, Facebook introduced its new Facebook Home service, which will initially be featured exclusively on HTC phones offered by AT&T.

Alternatively, the worst-performing stock on the Dow is IBM . As noted earlier by fellow Fool Jessica Alling, the company has been fighting to ward off concern over a recently released study suggesting that Oracle is outperforming Big Blue when it comes to new chips and servers — two of IBM‘s strong suits.

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The article Why the Dow Is Struggling to Hold On Today originally appeared on Fool.com.


John Maxfield has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines. 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 …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The Dow's Winning Streak Continues

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By John Maxfield, The Motley Fool

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March has been good to blue-chip stocks. Since the beginning of the month, the Dow Jones Industrial Average has closed higher in every trading session. Assuming it does so again today, that will make it 10 straight days of gains. According to Yahoo! Finance, that adds up to the Dow’s longest winning streak since 1996. As of 2:55 p.m. EDT, the Dow is up 60 points, or 0.4%.

Today’s rally was fueled by news that the employment picture is continuing to improve. The Department of Labor reported this morning that the number of Americans filing for unemployment benefits last week fell by 10,000 to a seasonally adjusted 332,000. The median estimate of economist surveyed by Bloomberg predicted an increase to 350,000. According to The Wall Street Journal, it’s generally held among economists that the labor market is improving when claims are below 400,000.

In terms of individual stocks, technology giants Hewlett-Packard and IBM are leading the Dow higher in afternoon trading, up 2% and 1.6%, respectively. As my colleague Dan Dzombak noted earlier, the British Serious Fraud Office recently opened an investigation into HP‘s claims that U.K.-based Autonomy defrauded HP into acquiring the software company. Meanwhile, as fellow Fool Jessica Alling pointed out, IBM is riding the waves of positive publicity related to its work for the city of Boston. In addition, IBM‘s strong presence in cloud computing and data analytics has positioned it well to exploit the opportunities that will inevitably spring up in the sector.

Heading lower, alternatively, are shares of retailing giants Wal-Mart and Home Depot . Because there doesn’t seem to be a specific impetus for either of these companies being down today, it’s possible that they’re suffering by association with the likes of J. C. Penney and Sears, two failing industry giants. As three of our top analysts discussed earlier today, the former is hanging to life by a thread, while the latter is doing only marginally better.

Beyond this, there’s also reason to believe that both of these companies are somewhat countercyclical — meaning that when things are generally going good, they perform worse. Here’s what Fool Morgan Housel had to say about this last month:

Wal-Mart is a peculiar company in that its selling point — insanely low prices — gains value when the economy is weak. Families who in normal times shop where it’s most convenient flock to Wal-Mart when the economy sours. As the economy was falling apart in early 2009, CEO Mike Duke noted on a conference call: “Our company is stronger than ever because we deliver price leadership and value and help our customers save money so they can live better.”

But that can go the other way. When the economy recovers, Wal-Mart sales might take a hit as consumers gain confidence and become less price-conscious.”

And the same, by the way, could be said about Home Depot, which relies to a certain …read more
Source: FULL ARTICLE at DailyFinance