After digesting the Federal Reserve minutes from the Open Market Committee meeting in June, it seems the broad markers were encouraged that more monetary easing would be arriving soon, as today finished on a slight rally. All is not well on this front, as the reports coming from the Fed officials seem to suggest that a recession is around the corner, followed by anemic growth for several years. Depressing as it sounds, some Fed officials believe it will be closer to 2020 until we have structural unemployment at healthy levels.
What will another round of QE do for us? Most likely it would give the markets a short-lived jolt, but until Europe rids itself of constant default worries, the United States will be restricted to sluggish growth and extreme volatility in the market place. Economic activity will continue to be stymied as business will limit its downside risk by delaying or decreasing the scope of future projects. However, there is always room for optimism, but with decreasing inflation and slowing jobs and economic growth, QE3 alone will not correct the problem.
Here's a snapshot of some of today's key market metrics.
Gain/ Loss %
|Dow Jones Industrial Average (INDEX: ^DJI )
|WTI Oil Futures
Source: Yahoo! Finance.
The Dow fell once again, losing more than 2% over the past five days, led by Boeing (NYSE: BA ) , which, after being praised yesterday for order commitments from the Farnborough Air Show, still has not landed a firm commitment. The worry is that airlines are putting off purchasing new airplanes until the global economy picks up its pace.
Oil bellwethers ExxonMobil (NYSE: XOM ) and Chevron (NYSE: CVX ) turned in a solid day, increasing 1.53% and 0.93%, respectively, as increasing oil prices provided steam to bolster the integrated firms. Brent Oil prices once again reached the century mark as U.S. crude supplies reversed the trend and fell for the second week in a row.
The growing theme is that investors are in for a tough stretch this earnings season, and SUPERVALU (NYSE: SVU ) adds to the trouble, missing earnings big time. The supermarket chain's EPS of $0.19 was considerably below analyst estimates of $0.38, as its share price is trading 26% lower after hours.
Marriott's second-quarter earnings increased just shy of 6% as the company saw increased profits from North American and European travel. The hotel-industry company also increased its full-year earnings outlook to $1.75 from $1.65, but the market is not rewarding the company as it trades lower after hours.
June was the third month in a row of disappointing jobs growth, and the only lifeline still dangling is the continuation of Operation Twist. With no immediate response expected from the Fed, investors need to be focusing on the long term and finding companies they can rely on to return capital in the long term. Now would be a great time to check out The Motley Fool's special report describing 3 Stocks That Will Help You Retire Rich. This free report will list three remarkable companies as well as offer great advice on how to invest to secure a comfortable retirement -- get your free report now.