A Slump or Surge Ahead for the Dow?

The American markets opened with a hangover following yesterday’s holiday, and various interest rate cuts in global markets failed to provide a quick remedy. Apparently, cheap, greasy money doesn’t hit the spot like a cheap, greasy breakfast burrito does. Or perhaps the indexes were still trying to digest recent events and a somewhat hazy economic outlook. Either way:

Index

Today's Movement

Year-to-Date

Dow Jones Industrial Average (INDEX: ^DJI  ) (0.36%) 5.55%
S & P 500 (INDEX: ^GSPC  ) (0.47%) 8.75%
Nasdaq (INDEX: ^IXIC  ) 0.00% 14.24%

                Source: Yahoo! Finance

All filler, no thriller?

U.S. stocks refused to find relief when the country’s largest payroll processor, ADP, revealed information indicating a boost in private sector employment during June. The report showed that 176,000 new jobs were added during the month, while an announcement from the Labor department stated that unemployment benefit applications fell 14,000, well below economists’ expectations.

Both reports, however, failed to stimulate the markets. Any euphoria experienced from global interest rate cuts fizzled by the end of the day, as well.  While the announcements from China’s central bank and the ECB do not directly affect the American markets, the lackluster response could foretell tomorrow’s events before they unfold.

Friday’s markets will respond to non-farm payrolls numbers, or more simply, a "jobs report," set to be released early in the morning. Today’s hiring data was merely a preview of what’s to come. So, on the one hand, a strong jobs report could bolster markets and signal a strengthening domestic economy. On the flipside, a muted jobs number could cause unease, but also signal that the Federal Reserve will take similar actions to mimic global central banks and propel the U.S. economy forward.

For investors, could this be a win-win for the stock market? Many experts believe that’s the case. Then again, after a flurry of economic news failed to lift the market’s spirits today, perhaps the major indexes are just jaded.

The Foolish takeaway

Regardless, investors should hone in on the individual stocks that are critical to their portfolios rather than riding the wave of market swings. On the Dow, company-specific news emerged today, when two not-so-positive developments put JPMorgan (NYSE: JPM  ) in the center of the spotlight once more. First, JPMorgan and Dow banking companion Bank of America (NYSE: BAC  ) find themselves in the middle of a scandal revolving around the LIBOR interest rate. Secondly, a federal judge aske d JPMorgan today to explain why it shouldn’t be forced to turn over e-mails sought by regulators in an energy-market manipulation probe. As if the debacle involving the so-called "London Whale," and a multi-billion dollar failed trade did not make investors squirm enough, go ahead and add this to the mix.

To wrap up, consider the reasons you’re invested and the industries you’re invested in. The market’s volatility should not concern a long-term, patient investor. Likewise, a few bad apples do not mean an entire industry is rotten. Evaluate companies like Bank of America by conducting more in-depth research, which you can find in our premium reports. Our senior banking analyst breaks down the risks facing this institution and the opportunity for a strong rebound. Click here now.

I happen to find several banking institutions highly attractive right now, and I’m not alone. Warren Buffett recently expressed optimism for conservative banks, and our analysts have uncovered what’s at the top of Buffett’s radar. Read on in this free report for a limited time. The report highlights “The Stocks Only the Smartest Investors Are Buying.”

Isaac owns none of the companies mentioned above. The Motley Fool owns shares of Bank of America Corporation and JP Morgan Chase. The Motley Fool has a disclosure policy. We Fools may not 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.


Read/Post Comments (0) | Recommend This Article (4)

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: 1934463, ~/Articles/ArticleHandler.aspx, 10/2/2014 2:48:52 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