Greece and Bernanke Fail the Dow

Well, this certainly was a busy week. Greek elections had the markets primed on Monday, Congress threw its own "Dimon Jubilee," and Ben Bernanke proved the Federal Reserve was willing to provide up to, but no more than, the barest minimum amount of monetary stimulus.

Before we jump in, let's take a closer look at how the three major indexes ended up after five trading sessions.


Gain / Loss

Gain / Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI  ) (119.09) (0.92%) 12,627.20
Nasdaq 15.28 0.53% 2,877.78
S&P 500 (6.42) (0.47%) 1,331.25

The major U.S. indexes ended up rather mixed. The Nasdaq posted a solid half-percent gain, while the S&P lost almost the same amount. The Dow's bottom-of-the-barrel performance was largely the result of a 2% to 3% decline in four of its five heaviest-weighted components. IBM makes up an astonishing 11% of the index -- and nearly a third when combined with Chevron, McDonald's, and Caterpillar.

Last Sunday's Greek elections, which reconfirmed the status quo, failed to boost the markets as some were anticipating, but had the far-leftist Syriza won and Greece's continued membership in the eurozone been in doubt, stocks would have fared substantially worse. Still, more austerity measures won't solve the problems facing Greece and other troubled countries like Spain. Symbols of the respective banking sectors, National Bank of Greece slumped 2% on the week while Banco Santandar (NYSE: SAN  ) actually gained 2% even as Spain hit record high borrowing costs.

The long awaited Moody's downgrades to various "too big to fail" institutions and the Federal Reserve's meager $287 billion extension of Operation Twist did little to shake up Dow component JPMorgan Chase (NYSE: JPM  ) as the index's top performer, up 4% for the week. In what is becoming a recurring series, CEO Jamie Dimon went to Washington to testify in front of Congress. He confidently announced that the bank should have a profitable quarter despite the "London Whale" trade that cost the firm anywhere from $2 billion and $5 billion.

Meanwhile, Operation Twist and its artificially low rates are affecting mortgage REITs such as Annaly Capital (NYSE: NLY  ) that make money off collecting the difference in spreads. Shares of Annaly were still slightly up on the week, however, and its monster 13% yield remains intact.

Energy companies were hit hard this week after poor manufacturing data, both at home and in China, raised doubt about the global recovery. Oil prices have dropped below $80 per barrel for the first time in months, while the price at the pump is set to decline into the busy summer season. Kodiak Oil & Gas (NYSE: KOG  ) tumbled 12% in response to falling commodity prices. Small exploration and production companies are more sensitive to commodity prices than are the big majors, because of their generally more expensive operations and limited ability to survive cyclical downturns.

For more risk-averse investors who enjoy solid dividends in the face of rising and falling commodity prices, I have good news. The Dow is loaded with companies that offer both secure payouts and highly sustainable business models built for the long haul. The stocks highlighted in The Motley Fool's new special free report, "The 3 Dow Stocks Dividend Investors Need," all have an X factor that makes them stand out from their illustrious Dow peers. Download it now, for free.

David Williamson owns shares of Annaly Capital Management, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase, IBM, and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Moody's, Annaly Capital Management, McDonald's, and Chevron and creating a synthetic long position in IBM. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

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Related Tickers

10/21/2016 4:47 PM
^DJI $18145.71 Down -16.64 -0.09%
JPM $68.49 Up +0.23 +0.34%
JPMorgan Chase CAPS Rating: ****
KOG.DL $0.00 Down +0.00 +0.00%
Kodiak Oil and Gas CAPS Rating: *****
NLY $10.08 Down -0.05 -0.49%
Annaly Capital Man… CAPS Rating: ****
SAN $4.67 Up +0.03 +0.65%
Banco Santander Ce… CAPS Rating: *****