Dow Jones Industrials: What to Expect This Week

The Dow Jones Industrials (DJINDICES: ^DJI  )  gave up a modest amount of ground last week. But in the coming week, Dow investors have a lot to look forward to. Home Depot  (NYSE: HD  ) will look to close out the first-quarter earnings season for the Dow Jones Industrials, while the Federal Reserve will be in the news with its latest release of FOMC meeting minutes, and that could move shares of financial giants Goldman Sachs  (NYSE: GS  ) and JPMorgan Chase  (NYSE: JPM  ) . 

Home Depot has given investors one of the most impressive growth rates in the Dow Jones Industrials over the past several years, as the home-improvement retailer has managed to find ways to boost its business even during periods in recent years when the housing market wasn't as healthy as it has been lately. Now that housing has recovered, Home Depot has the opportunity to accelerate its growth by making use of its dual approach of courting both housing contractors and do-it-yourself homeowners. Competition has started to get stronger in the industry as Home Depot's main rival has stepped up its game and produce some impressive results of its own. This week, look to see if Home Depot can sustain its track record of profit growth and give positive signs for its near-term future.

Meanwhile, the Federal Reserve will release its latest Federal Open Market Committee minutes this week. As expected, the Fed chose at the end of April to keep interest rates at current low levels but to further reduce its bond-buying activity under quantitative easing. The reduction keeps the Fed on pace to eliminate bond buying completely by the end of this year.

For JPMorgan Chase and Goldman Sachs, what's most surprising about the end of quantitative easing is that it hasn't yet produced a huge spike upward in interest rates. After all, just the threat of reductions in bond buying a year ago made rates almost double. But worries about the stock market's health have made investors reconsider their risk tolerance, and that in turn has led to moves out of stock indexes like the Dow Jones Industrials and into perceived lower-risk assets like Treasury bonds. That trend has been good news for Dow banks JPMorgan and Goldman Sachs for a couple of reasons. JPMorgan has a mortgage-banking business that could see a reawakening of refinancing activity if rates stay at or fall below their current 2.5% level. Goldman could benefit from corporate refinancing at current lower rates, with at least one final wave of bond issuance before the falling demand for bonds from the Fed's exit stops the downward pressure on rates.

This week, the Dow Jones Industrials could continue to see volatility as investors assess the potential for a major correction. Keep your eye on JPMorgan, Goldman Sachs, and Home Depot in particular to see how they respond to the Federal Reserve's release and the end of earnings season.

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under Wall Street's radar. To learn about about this company, click here to access our new special free report.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2962141, ~/Articles/ArticleHandler.aspx, 9/17/2014 8:07:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement